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Seconds Out

Employed with a second income, then HMRC would like to get to know you

HMRC have recently launched ‘The Second Incomes Campaign’, aimed at employees who are UK resident and running a business on the side but not paying tax on the income. A second income could derive from:

  • consultancy fees, e.g. for providing training
  • organising parties and events
  • taxi driving, hairdressing or fitness instructor
  • making and selling craft items
  • buying and selling goods, e.g. at market stalls or car boot sales.

To help taxpayers decide whether or not they are self-employed as well as being employed, HMRC have produced a seven minute video titled, ‘Do You Have a Second Income’ which takes individuals on a brief journey through the hallmarks of self-employment.

According to the video if you can answer ‘yes’ to one or more of the following questions then it is likely that you are self-employed:

  • Can hire helpers at your own expense
  • Risk your own money and can make a loss as well as a profit
  • Provide your own equipment to undertake the work
  • Work for a fixed price regardless of how long the job takes
  • Make key decisions, i.e. control
  • Work for a number of clients
  • Rectify own mistakes at your own expense

If only deciding on employment status were that easy and can someone please tell the Status Inspectors!

Those affected can take advantage of this latest amnesty, ‘Second Incomes Voluntary Disclosure Opportunity’ to secure the best possible terms, i.e. a reduced penalty as interest will still be payable on the tax arrears. Taxpayers who ignore this opportunity could face an investigation, higher penalties or criminal prosecution.

By Andy Vessey

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3 thoughts on “Seconds Out”

  1. Wayne Rozier

    So I run a party and pay helpers at my expense, if the food ordered is not good enough then I pop to the shops to buy more. People dance to the music on my sound system and eat off my plates in my kitchen. I decide who to invite, what to serve, when to serve it, what music to play and the time it’s all over. I bid goodbye to familiy and friends and tell HMRC it was a rocking party and that Mum gave me £100 notes to cover the cost, and the family gave me a load of extra items worth £2000 all to wish me Happy Birthday – HMRC rule:
    I Hired helpers at own expense
    Risked my money and couldv’e made a loss but actually made a profit
    Provided my own equipment to undertake the work
    Made key decisions, i.e. control
    Rectified own mistakes at own expense.

    The say they want their 20% / 40% cut of the fun.
    My wife says “that was good – can you organise a family party like that for me.”

    HMRC say clearly I’m now Working for a number of clients and want 40% birthday and xmas, easter, mothers day, anniversary and all other party gift money from Kids and Wife and any extended family.

    Daft? Maybe – but that’s what could be derived from teh test: Can you say yes to one or more of the questions.

  2. Andrew Harrison

    Hmm – to expand on Wayne’s comment – does any activity which meets at least one of those criteria have to be included in your tax return? Suddenly all those odd jobs and Dad’s taxi for my children become allowable expenses – a paper chase nightmare but think of the tax saving.
    Common sense needed but normally lacking.

  3. Simon

    As I’m sure you’re already aware it’s irrelevant whether or not you pass the test when you haven’t derived an income from it (and of course gifts don’t count otherwise you’d be liable for tax on all gifts – which you are not).

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