Share scheme reporting, Second income disclosure, Penalties for follower notices

The P11D forms are sorted, so what's the next tax deadline to worry about? That will be the annual returns for employee share schemes which are due in by 6 July, as outlined below. We also have news of a disclosure opportunity for individuals who have a second income, and some new HMRC factsheets about penalties and follower notices. 

This is an extract from our topical tax tips newsletter dated 9 June 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>> 

Second income disclosure 
This disclosure opportunity was opened in April 2014 (see our newsletter 17 April 2014), but the guidance has recently been updated. It amounts to an open-ended opportunity to disclose taxable income or gains and take advantage of a discount on penalties due. 

To use this disclosure opportunity, the individual (or you as their tax agent), must notify HMRC using a special online form or by telephoning: 0300 123 0945. HMRC will respond with a disclosure number, and a payment reference number to quote when paying the tax due. A full disclosure and payment of all liabilities must be made within four months of HMRC's acknowledgement of the notification. 

The calculation of the payment due must include interest and penalties, but the level of penalty will be no more than 20%, and could be zero for some years. If the taxpayer can't pay the full amount due in one go, you should contact HMRC and make a formal time to pay agreement. This will generally require instalments to be paid by monthly direct debit for a period of between 6 and 12 months. 

If the only undeclared income relates to let property, the individual should use the let property campaign to declare that income and any related gains. The let property campaign operates in a similar fashion to the second income disclosure, but the taxpayer has only three months to pay the amount due after notifying HMRC. 

The second income disclosure can't be used to declare employer's NIC, IHT, VAT, trust income or income arising from a deceased's estate during administration. It also can't be used if there is an open tax enquiry into the taxpayer's affairs. 

If the taxpayer is uncertain about their residency status, and hence their liability to pay UK tax, that point needs to be resolved before completing the disclosure form. Also if the taxpayer has been part of a tax credit claim in any of the tax years covered by the disclosure, that fact should be declared on the disclosure form.

This is an extract from our topical tax tips newsletter dated 9 June 2016 (5 days before we publish an extract on this blog). You can obtain future issues by registering here>>>
 
The full newsletter contained links to related source material for this story and the other two topical, timely and commercial tax tips. We've been publishing this newsletter weekly since 2007; it's clearly written and focused on precisely what accountants in general practice need to know about each week. You can obtain future issues by registering here>>>