HMRC now see payments you receive via credit card!

On September 1st 2013 new legislation kicked in which allows HMRC automatic access to data showing payments made to businesses via credit card, going back as long as 4 years. HMRC will receive this information direct from the companies who process credit card payments on behalf of businesses (‘merchant acquirers’).

No personal data identifying the card owners, nor the credit card numbers, will be supplied as part of the data — it will primarily show the quantity of transactions and values credited to any particular business via credit card. On its own this may reap £50 million per annum in otherwise ‘lost’ tax revenue and the exercise will be helped by HMRC’s ‘Connect’ system which compares data coming in from various sources and cross-refers for consistency. The scheme’s implementation has been aided by a £1 billion budget given to HMRC aimed at tackling tax evasion and fraud.

The new legislation is part of the Finance Act 2013 and is part of a major crackdown on tax evasion which overall costs the taxpayer £9 billion a year although that figure includes tax lost in all areas, not just that of undeclared income received via credit card.

So, once again, HMRC’s message is that they are closing in on tax evasion and undeclared income — another loophole, if we can call it that, has been closed.

When we are preparing tax returns or end of year accounts for London businesses and individuals, we at Taxfile have long suggested that credit card and bank statements are supplied to us so that we can not only make sure that nothing is missed in terms of income received, but also we can pick up any costs which are tax-deductible for our clients. So, in actual fact, everyone wins with this approach. Contact us any time if you need help with your tax computations, tax returns, year end accounts, CIS and tax refunds etc.