HomeFWJ TakeawayTax disputesDisguised remuneration and APNsDo social media influencers and online sellers need to pay tax?

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Social media influencers beware…

Anyone earning income from content creation on social media platforms such as Instagram, Facebook, Twitter, TikTok or YouTube, and anyone selling on Etsy, eBay, Shopify or dropshipping is liable to UK tax. Indeed, HMRC has recently started following a number of social media influencers itself, and not necessarily because it is enjoying their posts…

Why is HMRC following social media influencers?

The explosion of social media has changed the way in which a lot of people shop, interact with the entertainment industry and keep up to date with current affairs. It is now an industry in itself which, in 2022/23 in the UK alone, is estimated to be worth £2.6 billion.

Because of social media’s rapid growth, HMRC is investigating influencer tax affairs, concerned that not all income generated by those profiting from a social media presence is being properly declared for tax purposes. This may be down to a use of offshore structures, lack of tax knowledge (particularly amongst the younger influencers), or a lack of transparency.

As an influencer, even if you only receive gifts in return for content creation or promotional activity, there could be tax consequences – especially if you have a regular day job.

HMRC is addressing these concerns about the taxes of social media influencers by issuing ‘nudge’ letters to 4,300 influencers and online earners, reminding them of their responsibility to declare income and pay the right amount of tax.

How should social media influencers respond to letters from HMRC?

If you receive such a ‘nudge’ letter, you should consider your tax position immediately and make a judgement on whether you have any issues. If in doubt, seek guidance from a tax professional.

What happens if I ignore a ‘nudge’ letter from HMRC?

HMRC’s ability to gather information on your finances is far-reaching and stretches to most overseas jurisdictions; in short there’s very few places to hide these days. Therefore, if you receive such a letter, it is vital that you act quickly and take immediate action to identify and correct any errors in your tax affairs.

What are the implications of not reporting my online income?

Failure to declare any income can result in a tax investigation/enquiry. This includes online income and, if HMRC discovers under-declared earnings, it can impose stiff penalties (up to 100% of the tax due) and even, in the most serious cases, prosecute criminally.

If HMRC opens an enquiry/investigation into your affairs, you should immediately seek professional help.

What other tax implications should online earners consider?

Even if you are not earning regular income online, you still need to keep records and properly account for and declare any earnings or gifts. Tax is not easy and the implications of getting it wrong can have severe consequences.

Our expert tax dispute team at FWJ, which includes specialist lawyers, qualified accountants and a former HMRC investigator, can you help with any HMRC issues and put you on the right track. Call us today.

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A client who had received a Request for Security from HMRC for a sum that would have caused their company servere financial difficulties. We helped them to have the entire bill withdrawn

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