Fur and finance – Tax compliance in animal sales

If breeding and selling animals has turned into a source of income for you, you need to make sure your earnings are declared correctly to HM Revenue & Customs (HMRC).

You can earn up to £1,000 annually from casual trading or self-employment without needing to report it.

However, once your income exceeds this threshold, you will need to register for Self-Assessment, report your earnings, and pay any tax owed.

What happens if HMRC suspects undeclared income?

HMRC may send out a One to Many (OTM) letter, urging individuals to review their tax affairs.

Ignoring these letters can lead to penalties or an investigation.

Making a voluntary disclosure

HMRC’s online disclosure service allows you to report any undeclared income and settle your tax bill.

Once you notify HMRC of your intention to disclose, you will have 90 days to provide the necessary details and pay any outstanding tax.

If you have already received a letter from HMRC, your disclosure will be treated as ‘prompted,’ which may result in higher penalties than if you make a voluntary disclosure.

Registering for Self-Assessment

If your income from animal sales regularly exceeds £1,000, you will need to register for Self-Assessment.

This means filing an annual tax return and reporting all your earnings, including income from animal sales.

Responding to an HMRC letter

Receiving correspondence from HMRC can be intimidating, but ignoring it is not an option.

If HMRC does not receive an adequate response, they could launch an inquiry into your tax affairs, leading to penalties or, in severe cases, criminal charges if fraud is suspected.

If you believe you may have inadvertently committed tax fraud, it is essential you speak with a tax adviser at the earliest opportunity.

Need help with your tax obligations when selling animals? Contact us today.