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As online marketplace traders are targeted by HM Revenue and Customs (HMRC) in their latest campaign, the Chartered Institute of Taxation (CIOT) call for a general disclosure facility to be introduced…

On March 14 HMRC launched the e-marketplace campaign to target online traders that have not been paying all of their tax.

HMRC’s e-Markets Disclosure Facility is a limited-time opportunity that allows online market place traders who have not been paying the right amount of tax the chance to pay outstanding tax owed and receive lower HMRC tax investigation penalties than online traders who choose to wait for HMRC to find them.

If you are trading online through websites such as eBay, Folksy, Amazon, Etsy etc and have not been declaring tax, or think that you have not been paying the right amount of tax, then you have until 14 June to tell HMRC that you wish to take part in the e-Markets Disclosure Facility.

KinsellaTax would recommend contacting a tax professional before contacting HMRC; who can make a disclosure to HMRC on your behalf.

If chosen to take part in HMRC’s e-Markets Disclosure Facility then you have until 14 September 2012 to provide HMRC with a full disclosure of tax owed and arrange full payment, including interest and any HMRC tax penalty where due.

HMRC have stated that those making a full disclosure by 14 September will receive little or no HMRC tax penalty; a maximum of 10 per cent of tax owed.

Head of HMRC campaigns, Marian Wilson, said:

“This campaign is part of a wider HMRC initiative to provide support and guidance to the public on tax evasion and is aimed at people using online marketplaces to buy and sell goods as a trade or business and who fail to pay the tax owed.

“Those who only sell a few items and who are not traders are unlikely to be liable to pay tax on what they sell and will not be targeted by this campaign.

“Our aim is to make it easy for online traders to contact us and make a full disclosure of income, thereby putting their affairs in order.”

After the 14 September deadline HMRC will then use information ‘pulled together from different sources’ to investigate online traders that have not paid the right amount of tax and chose not to take part in the e-Markets Disclosure Facility.

If you are an online marketplace trader who has not been paying the right amount of tax to HMRC, not taking part in the e-Markets Disclosure Facility could leave you with a criminal prosecution, or a 100 per cent penalty of the outstanding tax owed.

The release of HMRC’s e-Marketplace Campaign has triggered the Chartered Institute of Taxation (CIOT) to call for a general disclosure facility to be put in place.

The CIOT argue that HMRC should adopt the advice given by the House of Commons Treasury Committee, in their recent published report – Closing the Tax Gap: HMRC’s record at ensuring tax compliance, released 6 March – to introduce a ‘general disclosure facility’ that will make it easier for UK taxpayers to get their tax affairs in order.

The Chartered Institute of Taxation say that as the third HMRC tax amnesty campaign runs in 2012 – following the Tax Catch Up Plan offered to tutors and coaches and the Electrician’s Tax Safe Plan (ETSP) open to electricians – disclosure opportunities offered to specific groups may leave those wanting to declare unpaid tax, but they do not fit into any of the current or past tax amnesty campaigns, waiting for ‘their opportunity’.

Gary Ashford, representative for CIOT’s Compliance Reform Forum, thinks that by launching many different campaigns HMRC are “missing the big picture”.

Ashford argues that a permanent national campaign should be introduced to allow all UK taxpayers who have not declared their income, to come forward and make a full disclosure to get their tax affairs in order; “It would need to be clear what penalties would be and the (limited) circumstances in which prosecution would be used”, Ashford added.

The House of Common’s Treasury Committee report – Closing the Tax Gap: HMRC’s record at ensuring tax compliance – also highlights the need for HMRC to give taxpayers a permanent route in which they can voluntarily declare their income and get their tax affairs up to date.

Have you failed to declare income?

To avoid a tax enquiry letter from the tax man you should make a full disclosure to HMRC.

KinsellaTax staff consists of ex-HM Inspector of Taxes and ex-HM Custom and Excise officers fully trained in all types of tax investigations.

Our tax investigation experts will make a voluntary disclosure to HMRC on your behalf, which could dramatically reduce your HMRC Tax Investigation Penalties.

Don’t wait for HMRC to find you; contact us before they contact you. Call 0800 471 4546 or click here to fill in an online tax enquiry form.

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