HMRC Puppy Taskforce – Not as cuddly as you may imagine

HMRC Targets Puppy Breeders: Letters sent to millions

HMRC is sending out letters to millions of people who they believe have not declared income from breeding and selling puppies. These could come as quite a shock when you receive one out of the blue, and some of the language used in the letters is meant to worry you.

HMRC has changed legislation so that selling platforms must provide them with information about who is selling on their platforms. However, this is only one source of information they have used. This information is in the public domain, so even before the change in legislation, the evidence is out there.

Registrations with the Kennel Club and social media are good sources of public information. There are even rumours that information could also be coming from pet insurers and the RSPCA.

If you have received a letter, HMRC is suggesting you file a voluntary disclosure. They won’t give a time scale of how far to go back. In the UK, the tax system is self-assessment, so they expect you to provide all the information for as long as you have been receiving income, in this case from breeding puppies.

If you regularly breed puppies, you should file a self-assessment tax return, as this is likely to be classed as a trade.

What information do you need to supply to HMRC?

• All the money you received for the pups/kittens
• All the costs you incurred, including vet bills, mating fees, microchipping, injections, etc.

However, if you had a one-off litter, you could argue that this isn’t a trade at all. If you didn’t receive more than £1,000 in total for the pups in that tax year, you wouldn’t need to declare the income.

What if you’ve missed previous declarations?

Unfortunately, the bad news doesn’t end there either. If you receive a letter and make a voluntary disclosure, the likelihood is that the taxable income you then declare is from a previous tax year, meaning you should have already declared this income. As a result, you are likely to incur penalties (fines for not declaring the income) and interest on any tax not paid. If you have been breeding for several years, this could add up.

These rules are not just for the sale of puppies but cover any kind of income—from breeding to rental properties, to selling on eBay, to name a few.