HMRC Credit Card Sales Campaign
Contributed by: Jan Lockley

HMRC are on the warpath again

This time it is businesses who accept payment by cards and have not reflected all transactions in a return. Predictably, HMRC wants to recover all the taxes payable by companies or individuals who use credit or debit cards to take sales orders.

Many businesses use credit or debit cards to process orders during the normal course of their business. This could be over the phone, directly in-store through a POS terminal or online through an commerce store. Given the variety of different transactions processing options available to a business, such as directly by your bank or through a multiple third party transaction gateways (such as PayPal and over 20 others), potential exists for under reporting sales.

Use the Credit Card Sales Campaign’s disclosure facility if:

  1. You or your business accept card payments for goods or service
  2. You or your business haven’t declared all your UK tax liabilities

Through the Credit Card Sales Campaign, HMRC is providing an opportunity to bring your business’s tax affairs up to date. HMRC has been steadily investing in new systems that can track business and personal transactions, and so there’s not much they don’t already know about you and your business. You shouldn’t be surprised then to learn that HMRC has details of all credit and debit card payments to UK businesses and this information is used to identify individuals and businesses that might not have paid what they owe.

Get the best terms

You need to tell HM Revenue and Customs (HMRC) if you either:

  • Haven’t registered with them
  • Have failed to declare all your income

The Credit Card Sales Campaign Voluntary Disclosure Process

As with other recent opportunities HMRC have presented businesses, there’s a procedure to follow.

You must first notify HMRC that you or you business wants to take advantage of the scheme. You are then required to make a full disclosure covering your income, capital gains, taxes paid and any duties. This has to be done within four months of HMRC acknowledging your participation. Once done, you have to make a formal offer of amounts to be payed, then payment and cooperation with HMRC.

One oddity with the new scheme is that HMRC invites those making a voluntary disclosure, to tell them how much of a penalty they should pay. Naturally, HMRC have provided some guidance, stating that, depending on your particular circumstances, full disclosure penalties will be levied at 0%, 10% or 20%. If you have an offshore disclosure to make, expect higher penalties.

Be warned though; if you think you have exposure to underpaid or non paid taxes due to credit or debit card sales, you need to act first. Remember, HMRC’s systems have details of all of these types of transactions. If they contact you first, you will not be able to take advantage of this disclose opportunity and face penalties of up to 100% – 200% for offshore liabilities, plus potential criminal prosecution if the circumstances are serious enough.

If you feel that this situation may apply to you or your business and would like to take advantage of the Credit Card Sales Campaign disclosure scheme, Berley can help. As with all matters with HMRC, care must be taken to ensure the correct method and level of disclosure is made and that the required process is followed and the Disclosure Form is carefully filled out. Let Berley ensure no mistakes are made and that the process is complete within the four months allowed.

Jan Lockley

Head of Tax