HMRC campaigns ― introduction

Produced by Tolley in association with Guy Smith of inTAX Ltd

The following Owner-Managed Businesses guidance note Produced by Tolley in association with Guy Smith of inTAX Ltd provides comprehensive and up to date tax information covering:

  • HMRC campaigns ― introduction
  • What are HMRC campaigns?
  • Why does HMRC launch campaigns?
  • How does HMRC approach campaigns?
  • What are the results of campaign activity so far?
  • Current HMRC campaigns
  • How are campaigns chosen by HMRC?

HMRC campaigns ― introduction

What are HMRC campaigns?

Campaigns are targeted disclosure opportunities for selected groups of individuals, traders and professionals to make declarations of any undeclared income and over-claimed expenses.

HMRC charges financial penalties on disclosures that give rise to additional tax.

Although sometimes referred to in the media as ‘amnesties’, campaigns are not an opportunity to avoid, evade or pay less tax as the term amnesty suggests, but an opportunity to pay a lower penalty on any additional tax resulting from a disclosure.

During an enquiry or other compliance check, the penalty chargeable is based on the behaviour of the entity involved (the individual or business), the type of tax involved and whether it relates to an offshore matter, the quality of the disclosure, and whether the disclosure is completely unprompted or prompted by HMRC action. The maximum penalty chargeable under these conditions can be up to 100% of the additional tax; so in simple terms, if £10,000 is owed in tax, HMRC can charge a £10,000 penalty.

During campaigns, however, HMRC encourages disclosures by offering beneficial penalty terms. The terms can vary between different campaigns, but are typically much lower than would be charged under more common HMRC activity.

Campaigns to date have included medical professionals, plumbers, internet traders, landlords, employees with a second source of income, credit card sales and individuals who have sold properties that are not their main residence.

Why does HMRC launch campaigns?

The core objective of HMRC campaigns is to collect more tax in a cost-effective manner.

When the Coalition Government came into power in the summer of 2010, the Treasury immediately started looking for cost efficiencies across the board in an effort to reduce the annual spending deficit.

When the outcome of the Spending Review (SR10) was announced, HMRC was told to reduce its costs by 25% and deliver extra revenue each tax year from increased compliance activity.

Although HMRC was told it could reinvest some of its efficiency savings to help

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