HMRC have launched their latest target industry campaign. It is the Direct Selling Campaign.
Direct selling is where you sell directly to a customer, often door to door, in customers homes or their workplace. This can include selling to friends and families. Companies can use different terms for the people who sell their products – you may be an affiliate, agent, rep , consultant, distributor. It may also include online sales and commissions.
Your selling could well involve demonstrating a product, organising parties or using catalogues. As a direct seller you will usually receive a commission for any sales made. Whilst some people are involved in direct selling as a full time business, many use it to top up income from another job or worse when they are unemployed. This is where problems will most likely arise.
As a direct seller you will generally be considered to be self-employed. This means that you are responsible for telling HMRC about what you earn and calculating and paying your own taxes. You are responsible for telling HMRC about your income and paying tax and National Insurance (Class 2 and 4) yourself. It is possible to be employed and self-employed at the same time, for example working for an employer during the day and working for yourself in the evenings or at weekends.
If you are involved in direct selling and have not told HMRC about all of your income, you may not be paying the right amount of tax. You will need to submit a tax return. Any tax due could potentially be collected through your tax code, particularly if it is only small. The Direct Selling campaign is a chance to bring your tax affairs up to date. This will apply if you started trading before 6 April 2011 and have not informed HMRC of that fact. You will need to send HMRC your disclosure as well as pay any tax you owe by 28 February 2013.
If you take part in this campaign and tell HMRC about any income that you haven’t previously disclosed you can tell HMRC how much penalty you think you should pay (you may have no penalty to pay at all). You may also be able to pay what you owe by instalments if applicable.
If you have been a direct seller since 6 April 2011 or later you must make sure you are aware of your tax obligations and register with HMRC; however you do not need to complete the additional disclosure.
PAH Accounting are able to help with your accounting and getting you registered. See below for a YouTube video on how to register as self employed. Feel free to contact us for further information.