Do You Know Your Tax Obligations for Breeding and Selling Animals?

As more people turn their passion for breeding and selling animals into a source of income, HM Revenue & Customs (HMRC) will be writing to people to ensure that those involved in these activities are paying the correct tax.  

Whether you’re breeding dogs, cats, or other animals, it is important to know what your tax obligations are. 

Do you need to pay tax on your animal sales? 

If you are involved in the breeding or sale of animals, you may be required to declare income if your sales exceed the tax-free trading allowance of £1,000 for a tax year.  

This means that if your earnings from animal sales surpass this threshold, you are legally obligated to report this income to HMRC.  

You must also consider any other taxable income you have, as this could further impact your tax liability.  

For help with working out your taxable income, contact us today.  

HMRC is watching 

HMRC is actively sending letters to individuals it believes may have failed to declare income from the breeding or sale of animals.  

If you receive one of these letters, you must take it seriously and act promptly. 

Making a voluntary disclosure 

If you realise that you have undeclared income from previous tax years, HMRC encourages you to make a voluntary disclosure using their online service.  

Once you receive the letter, you must notify HMRC of your intentions to disclose as soon as possible. You have 90 days to complete your disclosure and pay any tax owed. 

If a penalty is charged, it will be calculated based on the fact that you made a ‘prompted disclosure.’  

This means that although you are coming forward voluntarily, it is in response to HMRC’s letter, which could result in a higher penalty compared to an unprompted disclosure. 

For any assistance with making a voluntary disclosure, our team of accountants can help, speak with us for further information.  

Registering for Self Assessment 

If your income from breeding and selling animals continues to exceed £1,000 in future tax years, you will need to register for Self Assessment.  

This requires you to complete and submit a tax return annually, ensuring that all your income, including from animal sales, is properly reported. 

Contact our team today for any help with registering for Self Assessment.  

Responding to HMRC’s letter 

Ignoring a letter from HMRC or failing to declare the correct amount of income can have serious consequences.  

HMRC may decide to check your tax affairs more closely, and this could result in higher penalties or even a criminal investigation if deliberate tax fraud is suspected. 

If you have received a letter from HMRC and are not sure how to respond, we are here to advise you on the next steps.  

Using the Contractual Disclosure Facility (CDF) 

If you believe you’ve committed tax fraud, you can inform HMRC through the Contractual Disclosure Facility (CDF). 

Before informing HMRC, we would advise you to speak with our experts to be certain that tax fraud has been committed.  

The CDF is designed for taxpayers who wish to admit to tax fraud. By entering into the CDF, you agree to: 

• Admit that your deliberate conduct caused a loss of tax 

• Provide HMRC with details of all tax losses resulting from your deliberate conduct 

• Submit a detailed report within 60 days, including a statement confirming the accuracy and completeness of your disclosure 

In return, HMRC will agree not to pursue a criminal prosecution for the tax fraud you’ve admitted to under the CDF. 

If you are involved in the breeding or sale of animals and require assistance with your tax obligations, we are here to help. Contact us today for more information.