Direct selling involves selling directly to customers without the need for a shop. Selling can involve demonstrating a product in a customer’s home, sometimes at a party, while some agents sell door to door, often using catalogues. Direct sellers take commission on the sales they make.
In another campaign from Her Majesty’s Revenue and Customs (HMRC), people selling directly to customers and who haven’t paid all the tax they owe have been offered the opportunity to come forward and pay up. Under this time-limited opportunity, direct sellers, who could be “agents”, “consultants”, “representatives” or “distributors”, can pay the tax they owe and benefit from lower penalties available to those who come forward, rather than wait for HMRC to catch up with them.
Marian Wilson, head of HMRC Campaigns, says:
“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. The Direct Selling campaign is an opportunity for you to bring your tax affairs up to date, on the best possible terms.”
Direct sellers are generally considered by HMRC to be self-employed. This means they are responsible for telling HMRC about what they earn and for calculating and paying their own tax. To respond to the campaign, direct sellers should tell HMRC about the tax due and make arrangements to pay any tax, interest and penalties owed by 28 February 2013, by completing a disclosure form online.
Nearly £510 million has been raised by HMRC from campaigns, and a further £120 million from follow-up activity. Campaigns launched so far have targeted offshore investments, medical professionals, plumbers, VAT defaulters, coaches and tutors, electricians and online traders.
The benefits of the HMRC Direct Selling campaign are that those who make a full disclosure will be offered a simple and straightforward way to put their tax affairs right, and may not be charged a penalty at all, with most receiving a penalty of no more than 10 per cent of the tax they owe. However, once this disclosure opportunity closes on 28 February 2013, taxpayers who have not come forward but are found to have unpaid tax liabilities will face higher penalties, rising to 100 per cent of the tax unpaid or, potentially, criminal investigation.