Another HMRC campaign - Direct Selling
HM Revenue & Customs (HMRC) are running a campaign for ‘Direct Selling’ until 28 February 2013.
Direct selling usually involves door to door selling or selling in a customers’ home or in a customers’ workplace. The Direct sellers’ are commonly referred to as:
The actual process of selling may involve demonstrating products to customers’, at their home, workplace at a party or by using catalogues which may be to friends, relatives or anyone else. Typical examples would include the Avon lady or Tuppaware parties. The income earned by the ‘seller’ will usually be a commission on the sales made. The time involved will not be relevant, so it could be part time or a full time commitment.
HMRC generally view Direct sellers as self-employed and therefore the seller is responsible for informing HMRC what they earn and calculating and paying any tax and national insurance due. This is the general view; not all direct sellers are considered to be self-employed. A simple way to test to see if you are is if you say yes to all of the following questions:
• Do you have responsibility for your business?
• Can you decide how and when you do your work?
• Are you paid on a commission only basis?
• Do you risk your own money in setting up and running your business?
• Do you receive no holiday or sick pay from the company you represent?
• Can you hire other people to help you or do the work for you?
It is worth noting that an individual can be both self-employed and employed at the same time.
The campaign targets Direct Sellers who started trading before 6 April 2011 and have not informed HMRC. To encourage compliance, HMRC will give the "best terms available" in terms of penalties if your voluntarily disclose your income and pay any tax and national insurance owed. HMRC may also allow you to pay any outstanding tax and national insurance by instalments, however this is discretionary.
If you wish to take advantage of the campaign, you can inform HMRC by post or email using the online form telling them:
• all income, gains, and other liabilities owed;
• following the guidance, the amount of interest due for the late payment;
• assess the correct level of penalty to reflect why you have not paid the right amount in the past;
• pay what you owe.
Access to the online form and how to calculate what you owe together with details of HMRC’s Direct Selling campaign can be found here.