HMRC Targeting Dog Breeders and Hobby Breeders

Oct 2, 2024

HMRC Targets Dog Breeders: What You Need to Know About the Latest Tax Compliance Campaign

Dog breeders, both professional and hobbyist, are in the spotlight of HMRC’s latest tax compliance campaign. With the rise in demand for puppies during the Covid lockdowns, many individuals may have made financial gains without realizing the tax implications. Now, HMRC is cracking down on undeclared income from dog breeding and selling activities, aiming to recover unpaid taxes.

Why is HMRC Focusing on Dog Breeders?

The animal breeding industry has been on HMRC’s radar for some time. Back in 2015, they established a dedicated department to tackle tax avoidance in this sector. By 2019, over £5 million in undeclared income from dog breeders had already been recovered. However, the surge in puppy sales during the lockdowns prompted HMRC to step up its efforts, targeting those who may not have declared the income they made from selling puppies.

What Does HMRC’s Compliance Campaign Involve?

As part of this campaign, HMRC is sending out “One too Many” letters to breeders they suspect of under-reporting their earnings. These letters indicate that HMRC has information suggesting undeclared income from breeding activities, even if those activities were small-scale. They are using a variety of data sources, including pet insurers, websites like pet-selling platforms, social media, and even the RSPCA, to track this undeclared income.

If you receive one of these letters, HMRC is giving you the opportunity to voluntarily disclose any undeclared income. However, if you fail to respond, HMRC may open a formal investigation into your tax affairs, which could result in higher penalties or, in severe cases, a criminal investigation.

What Should You Do If You Receive a Letter?

If you’re a dog breeder and receive one of these letters, it’s important to take it seriously. Here’s what you need to do:

  1. Review Your Income Records: Go through your financial records to ensure all income from breeding and selling animals has been correctly reported.

  2. Disclose Undeclared Income: If you find any undeclared income, you will need to voluntarily disclose this to HMRC. This can be done online, and HMRC typically gives you 90 days to pay any owed taxes.

  3. Seek Professional Advice: It’s a good idea to consult a tax expert to ensure that your disclosure is accurate and compliant with HMRC’s requirements. A professional can guide you through the process and help you avoid additional penalties.

Why Acting Quickly Matters

HMRC’s campaign against dog breeders is just one part of a broader initiative to crack down on tax avoidance. New campaigns are being launched all the time, targeting various industries and income sources, such as gains from crypto assets. With HMRC becoming more adept at using data analysis to identify tax discrepancies, it’s vital to ensure your tax affairs are in order, whether you’re a full-time breeder or someone who sold a single litter of puppies.

Failing to act could result in significant penalties and further scrutiny from HMRC. It’s always better to voluntarily disclose any discrepancies before HMRC launches a formal enquiry.

Need Help? Kernow Accountancy is Here for You

Navigating HMRC’s tax compliance campaigns can be stressful, but you don’t have to go through it alone. At Kernow Accountancy, we’re here to help dog breeders ensure their tax affairs are fully compliant and up to date. Whether you’re a professional breeder or someone who sold a few puppies, we can guide you through the disclosure process, helping you avoid potential penalties and ensuring you meet HMRC’s requirements.

If you’ve received a letter from HMRC or simply want to make sure your records are accurate, don’t hesitate to reach out. Our team is experienced in handling HMRC campaigns and can provide expert advice tailored to your situation.

Contact Kernow Accountancy today for assistance with your tax compliance needs.

By staying proactive and ensuring your tax affairs are in order, you can avoid unnecessary penalties and stress. Let’s make sure you’re prepared for anything HMRC throws your way!