I met a private investigator last week. Luckily, he hadn’t tracked me down for any of my many misdemeanours – he came to see me about being a client.
But somebody who is busily tracking people down is the Taxman. And he is using puppies to help him!
HMRC has had access to lots of official records for a number of years and they’ve got pretty clever in matching things up since they learned to use their computers. They use the DVLA to see who’s buying and selling cars. They use the Land Registry to see if people are selling houses, and they use the passport office to see if people are taking holidays that don’t fit in with the level of income they declare to HMRC.
And, last week, one of our clients got a letter to ask them about some puppies they’d bred, and whether they’d sold them for a profit.
It turns out that HMRC has access to the Kennel Club’s records. They’ve also been speaking to pet insurers and the RSPCA to look for people breeding and selling puppies for profits.
And puppy profits mean taxes.
So, what are HMRC and their Paw Patrol looking for?
Well, they’re looking to see whether people are conducting a trade as a puppy breeder. They have done this in the past, but the rise in puppies post-COVID has focused their mind again.
It’s okay to sell a puppy as a one-off. And HMRC has a de minimis £1,000 annual limit for sales in any trade -they’re not trying to catch people selling one puppy to a friend, or a few bits and bobs on Ebay.
But more than £1,000 and there is income to declare to HMRC…and potentially tax to pay.
So they’re looking for people who might have bred a litter of puppies and sold more than one or, as an even bigger giveaway that there could be some unpaid tax, people who have had repeated litters during the year.
They do the same across lots of other platforms and they are spreading their net wider than just “official” records. For example, they do look at eBay and other online platforms to see whether people are selling stuff as a business rather than just a clear out every now and then.
If you’re not sure whether you’re conducting a trade, whether it be puppies, selling a few things on eBay, or even a hobby that’s making you a few quid, have a chat with an accountant who knows.
Or Scooby Doo might catch you!
If you have any questions, please hit “reply” or give us a ring on 0151 380 8084.
Many thanks
Jon
PS My favourite HMRC ploy that I’ve come across was when they investigated an old restaurant client of mine looking for cash sales – a common suspicion of restaurants and takeaways. Before writing to the client, they sat outside for a few nights to count the number of people going in to match up to the number of diners declared. They also went in and paid for a meal in cash to see whether it was included in the takings. They’re pretty clever really…and they got a nice meal on expenses!