Undeclared income and HMRC

Our experts tell you how to proceed if you haven’t told HMRC about any income you have earned

Our experts at DSR Tax Claims know how hard it is to find good, quality information about HMRC’s tax regulations that is easy to understand, and that’s why we have created these handy guides to tell you everything you need to know. Our aim is to make life easier for our clients and that is why we want to share our expertise with you. You can also call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

What happens if you haven’t told HMRC about any income you have made?

If you have made any money that you need to pay tax on (from any source) and HMRC don’t know about it, you need to tell them as soon as possible. The reason you haven’t told HMRC about the income may be because you didn’t realise you needed to tell HMRC about it, or maybe you weren’t sure how to declare that income to HMRC. Maybe you failed to inform HMRC because you weren’t able to pay the tax on the income. It’s really important that you tell HMRC before they discover that income themselves – they may consider your case more favourably if you have told them about the income. HMRC do have the power to prosecute you if they believe you have given them false information about the tax you owe.

Undeclared income tax

There’s no need to tell HMRC about income you have already paid tax on, such as your salary or wages from your job. HMRC already know about this income and the correct tax has been deducted from it. However, if you don’t think enough tax has been deducted from your wages or from your pension, you need to inform HMRC.

You also need to tell HMRC if you have earned other taxable income from other sources that you haven’t declared in a Self Assessment tax return. This income could come from rental properties, from capital gains (for example, selling valuable possessions, shares or property) or from working for yourself. The income you make by working for yourself includes income you make if you regularly buy and sell items (such as at car boots sales or on eBay). If you earn any income by working for yourself, you will also have to register as self-employed and fill in a Self Assessment tax return as well as being taxed through your main employment.

If the additional income takes you over your Personal Allowance, you will have to pay tax on it. You need to declare this income on a tax return so you will need to register for Self Assessment with HMRC. If you are already registered but you haven’t declared all your income, you can make a change to your tax return to include this income.

If you don’t usually send a Self Assessment tax return to HMRC, you will need to register to do so and then you can declare any income you haven’t paid tax on for the last 4 tax years. You will need to fill in a separate tax return for each year. Once you register for Self Assessment, HMRC will write to you to tell you what you need to do next.

What about other taxes?

You might also need to register for the following taxes if they are applicable to you:

  • Corporation Tax, if you run a limited company
  • VAT, if your taxable annual business turnover is more than £81,000
  • PAYE for employers, if you employ people other than yourself

What about overseas income?

If you are a UK resident and you earn money overseas, you may need to report this income through a Self Assessment tax return. If you fail to report this income, you may have to pay both the undeclared tax and a penalty, which could be worth up to double the tax you owe. You may also be prosecuted if you give false information about the tax you owe – HMRC will often view your case more favourably if you have told HMRC about your unpaid taxes as soon as you can.

If you have undeclared foreign income, you might be eligible to tell HMRC about it through an ‘offshore disclosure facility’ if:

  • You haven’t told them about your foreign income
  • You’re not paying the correct amount of tax
  • You have previously made an incorrect claim
  • You are behind with your tax

An offshore disclosure facility (also known as a worldwide disclosure facility) allows you to declare any previously undeclared overseas income and calculate their tax liability and penalties and HMRC may agree to view your case on more favourable terms. This allows you to declare that income before the introduction of tougher legislation to crack down on overseas tax evasion.

If you are not eligible to use an offshore disclosure facility but still have undeclared income to inform HMRC about, you can contact HMRC’s Offshore Co-ordination Unit on 0300 053 0310. Lines are open from 9am to 4pm Monday to Friday. You can also email them at ocu.hmrc@hmrc.gsi.gov.uk

How can DSR Tax Claims help?

Unfortunately, DSR Tax Claims are unable to help with undeclared income. However, if you are a client of DSR Tax Claims, things are unlikely to get this serious as you will have the benefit of the wisdom and experience of our expert team on your side. Our team of experts at DSR Tax Claims are always on hand to help our clients and our excellent standing with HMRC means that we can make sure you don’t fall foul of their regulations, while claiming your maximum tax relief. We can even take care of all that paperwork and deal with HMRC on your behalf too. Call our friendly team on 0330 122 9972 – we’re the tax experts you can trust.

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