HMRC Card Transaction Scheme

What if we told you that Her Majesty’s Revenue and Customs had a state-of-the-art £100m computer system designed to root out people who weren’t paying the correct amount of tax?

For most people, the reaction might be “typical HMRC” and then they’d get on with the rest of their daily lives. For others, there would be a slight feeling of horror.

Why? Because not everyone has declared the correct amount of tax going back over their lives. Previously it had been, for many, relatively simple to get away with it as the HMRC can’t be everywhere at all times. They still can’t but in the last 20 years, the internet has connected us all and it’s led to a lot more information about who we are and what we do being available to the authorities.

What is the Card Transaction Scheme and what does it have to do with the increasing digitisation of HMRC’s activities? Please read on.

HMRC’s Connect System

According to the Daily Telegraph, HMRC’s super computer “draws on information from myriad government and corporate sources to create a profile of each taxpayer’s total income.”

The Connect system can now draw information from 60 other countries and it can track the following:

  • Bank accounts and financial institutions
  • Driver and Vehicle Licensing Authority (DVLA)
  • Land Registry information
  • Visa and Mastercard transactions (anonymised)
  • Council tax records
  • VAT returns
  • Previous tax investigations
  • Previous tax returns
  • Earnings (from any employer)
  • Child benefit payments
  • Maintenance payments
  • Ebay, Amazon, Gumtree, Etsy, Airbnb earnings
  • Twitter feeds
  • Facebook posts
  • Instagram pictures

Speaking in the same article, George Bull, RSM senior tax partner told the Telegraph stated that, “We all leave a massive electronic footprint of where we are, when we are away, what we do and what we spend.”

“This is the tipping of the scales…Five years ago those making minor tax errors would feel fairly safe. But HMRC now has more information and more access to information,” according to BDO accountant Richard Morley.

Who are they using HMRC Connect to come after?

The HMRC Card Transaction Program is using Connect, among other tools, to find people who:

  • have taken card payments but not told HMRC
  • have accepted payments in cash, over the internet, or over the phone
  • traders not registered with HMRC who take cash and card payments

They want taxpayers to come forward and declare where there have been errors in their tax returns. In HMRC speak, they want “businesses that accept card and cash payments and haven’t reflected all transactions in a return, to bring their affairs up to date and take advantage of the best possible terms.”

What happens to people who make a disclosure?

It depends. If you’re registered for Self Assessment and, in HMRC’s view, they believe you “have taken care to make sure your tax affairs were correct”, they will only look for discrepancies in your last four years’ worth of tax payments.

If you are registered for Self Assessment and they think you have been careless, they will look for opportunities to charge you tax from your previous six years’ returns.

If HMRC believe you have made deliberate mistakes or you have started a business without telling HMRC, they reserve the right to look for unpaid tax over the last twenty years. 20 years!

What happens to people who don’t come forward and who are found out?

In addition to the remedies above, they may fine you 100% or 200% of your unpaid tax on top of the actual tax owed itself. You may also receive a fine of £3,000 for failing to keep adequate business records.

What do HMRC consider as income for the purposes of the Card Transaction Program?

Be in no doubt, they will examine every and all aspects of your financial life, including income made from investment, income made from property, overdrawn director’s loan accounts, capital gains, unpaid tax on anyone you’ve employed, VAT, Class 2 National Insurance Contributions, trusts, inheritance tax, and tax credits.

Their goal is to find as much unpaid tax as possible that they can charge you for.

I have something to declare. What should I do?

There’s always the option of keeping quiet. It is not one we would recommend and one we would strongly dissuade anyone who came to us for advice from.

It’s time to bite the bullet and take what’s coming to you. It’s going to be painful but it’s best to get it out of the way, pay your dues, and get on with the rest of your life, personally and professionally.

With your consent, we’ll talk to HMRC and indicate to them that you wish to join the program. It’ll take about 90 days and we’ll work closely with you but we’ll prepare a full disclosure fil on all of your income that HMRC do not know about. They will carry out an investigation and we’ll show you how to cooperate with the taxman fully.

We’ll present an offer to them. If they accept the offer, you pay them what you owe. If you can’t afford the sum at the moment from your personal or professional cashflow, we’ll try to negotiate a time to pay arrangement – although there is no guarantee of success with that.

If you have something you need to tell HMRC and want professional and experienced representation by your side, please call us on 01932 704 700 or email

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