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In the latest wave of nudge letters, HMRC has sent letters to online sellers, influencers and content creators warning them that they have not paid enough tax
Gig economy workers and traders selling online are being sent a detailed letter from HMRC asking them to check that they have reported all their income properly, particularly any earnings in excess of their tax-free personal allowance of £12,570 and suggesting that they make a digital disclosure if they have not complied.
Illustrating the scope of HMRC’s data analysis capability, the letter to content creators, including those running blogs and social media accounts with sponsorship, stated: ‘We have information that shows you’ve earned money (income) from creating content on digital platforms.
‘We also have information that shows that you have not told us about some or all of this income. This means you may owe tax.’
HMRC began issuing both sets of letters last week, according to the Chartered Institute of Taxation (CIOT).
Online sellers have been given 30 days to complete a ‘certificate of tax position’.
CIOT warns that ‘due to the serious consequences of making a false declaration’, it is important for accountants and tax advisers to ‘consider very carefully whether your client should sign and return the certificate of tax position’.
In the letters, HMRC suggested that if taxpayers have previously undeclared income to disclose they must submit a Notification of Intent to disclose it, using HMRC’s Digital Disclosure Service (DDS) process.
However, CIOT warned, ‘depending on the individual circumstances of the taxpayer, other approaches may be better, for example Code of Practice 9 where fraud is suspected’.
The letters advise the taxpayer that HMRC holds third party information that shows their trading activity, part of new rules to force online platforms to share sales data with HMRC.
Dawn Register, tax dispute resolution partner at BDO said: ‘With so much of the UK economy going online since the pandemic, it is surprising that HMRC has not focused fully on this area before.
‘It is not yet clear quite who HMRC is targeting with these letters, but it does have information from online marketplaces already.
‘Online content creators are a specific target so online ‘influencers’ as well as more traditional sellers and casual workers bidding for work online can expect to be contacted.’
Despite the urgent tone of the letter, Register recommends that taxpayers take time to consider the implications as there are a number of ways to deal with disclosure issues.
‘Anyone who gets one of these letters shouldn’t panic but should make sure that their tax affairs are in order. If you haven’t already registered with HMRC now would be a good time. But you don’t have to immediately fill in the disclosure form that accompanies the letter – depending on your circumstances there may be better ways to put things right, so get some expert advice before responding.’
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