HMRC has launched a new compliance campaign this summer, focusing on individuals involved in the breeding and sale of animals, particularly dog breeders.

This initiative includes a new round of ‘nudge’ and enquiry letters sent to those suspected of not fully reporting their income from such activities.

With an increase in data being shared with the revenue, and a wealth of information available online, HMRC has gained greater insight into the financial activities of individuals involved in animal breeding.  This has enabled them to identify cases where they believe profits from the sale of animals, which are considered taxable income, have not been accurately declared.

The sale of puppies, in particular, saw a significant price surge during the COVID-19 pandemic.  As a result, HMRC are likely expecting this campaign to yield a small windfall in tax revenue.

Online platforms and social media have become common places for advertising and selling animals, providing HMRC with information on potential sources of income.  Armed with this data, HMRC is reaching out to individuals with an opportunity to correct their tax affairs. Those who have received a letter are encouraged to bring their accounts up to date, but it is important to note that taxpayers do not need to wait for HMRC’s correspondence if they believe they may have undeclared income.

In cases where individuals proactively disclose their tax liabilities, HMRC may impose penalties, but these are often reduced for those who come forward voluntarily rather than waiting to be contacted. This could result in more favourable penalty rates compared to those who are caught after HMRC’s initial contact.

As with any HMRC campaign, this also creates a window for fraudulent letters to be issued and it is therefore vitally important to check that the correspondence from HMRC is legitimate, before any personal details are shared.

If you have received a letter from HMRC or believe that you may have undeclared income from the sale of animals, it is advisable to seek professional advice click here to get in touch….