HMRC Begins To Investigate Credit Card Transactions

HMRC’s Card Transaction Programme is a new disclosure opportunity allowing businesses that accept card payments and have not reflected all transactions in a return, to bring their affairs up to date and take advantage of the best possible terms.

These could include businesses which have not declared all their income and those that are trading but have not registered with HMRC. HMRC warns that it has the powers to obtain data from card processing operators in order to identify such businesses.

Similarly to other disclosure campaigns, there are a number of steps involved in taking part in this disclosure opportunity. The initial step is to notify HMRC that you wish to take part in the Card Transaction Programme; this can be done using HMRC’s digital disclosure service. Taxpayers must then make a full disclosure within 90 days of being issued with a Disclosure Reference Number (DRN). The disclosure must include a formal offer and payment of any self assessment, VAT, capital gains tax or other duties or tax owed. It is essential that full cooperation is maintained with HMRC, throughout the process.

In some cases there may be no penalty to pay at all, but if there is it is likely to be a significantly lower penalty than it would be if HMRC were to make a discovery outside the Card Transaction Programme. HMRC’s guidance states that penalties for a full disclosure made as part of the campaign will usually be levied at 0%, 10% or 20% depending on the circumstances with higher penalties for offshore liabilities.

Taxpayers who are contacted by HMRC before making any disclosure will miss out on the benefit from the terms of this campaign. Penalties of up to 100% of the unpaid liabilities, or up to 200% for offshore related income could then be levied along with the risk of criminal prosecution in serious cases.

The Card Transaction Programme starts with a disclosure relating to an individual’s own tax or partnership affairs (each partner will need to make their own disclosure), an individual’s company’s tax affairs (if they are a director, or company secretary) or via a tax adviser or personal representative. Each person or company requires a separate disclosure and each disclosure should outline the share of the income they wish to disclose.

HMRC says it anticipates that the vast majority of disclosures will be accepted and says individuals who submit a disclosure should hear within two weeks if it is acceptable.

There is currently no end date for this campaign, however anyone affected should take action to make a disclosure as soon as possible.

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