HMRC to contact social media influencers and online sellers

HMRC is sending ‘nudge’ letters to those who it believes may have been making money from selling goods online or producing digital content, asking them to check that their tax affairs are correct.

Nudge letters are increasingly becoming HMRC’s preferred method of checking compliance. As HMRC continues to struggle with limited resources, it simply doesn’t have the ability to investigate everyone. The ‘one-to-many’ approach is proving to be an effective way of collecting outstanding tax.

Typically used where HMRC has obtained a large amount of data relating to a particular group of individuals, nudge letters are sent to many taxpayers at once, prompting them to review their tax affairs. Where a taxpayer needs to bring their tax affairs up to date, the letter invites the individual to make a disclosure using the Digital Disclosure Service, or where the income or gain is offshore, the Worldwide Disclosure Facility.

We have already seen this approach being used by HMRC when it has obtained information relating to properties in the UK and abroad, offshore companies that own UK property, foreign bank accounts and crypto assets.

Next up, it’s social media influencers and online sellers. If you’ve been earning money from Instagram, YouTube or TikTok, or you’ve been selling goods on eBay or Amazon, a brown envelope with a letter from HMRC could be on its way.

What information does HMRC have?
HMRC is likely to have received data from online marketplaces, as well as seeing who is popular online and possibly monetising their activity. They may have third party information from online streaming platforms – increasingly, HMRC is using its information powers to collect data from all sorts of business intermediaries and those who facilitate payments.

HMRC collects data from a range of other sources, such as credit files, bank interest, offshore bank accounts, card payment processors, land registry and DVLA. HMRC then compares this data with what is declared on tax returns. If there is a mismatch (or no tax return at all), this can prompt a nudge letter or an enquiry.

What should I do if I get a nudge letter?
Recipients of a nudge letter will be encouraged to seek professional advice right away. Sometimes the nudge letter will ask that a form is filled in to either state that there is nothing to declare, or to confirm that a disclosure will be made. Before corresponding with HMRC in any way, you should carefully consider whether there has been an error with tax and, if so, to what extent.

It might be that HMRC’s information is wrong and there is no tax to pay. If, on the other hand there is a disclosure to be made regarding unpaid tax, we can assist you with that process.

We have a team of highly experienced ex-HMRC inspectors who can review your individual circumstances, calculate the tax that may be due and give you specialist advice. Our clients include online retailers and online broadcasters, as well as those with offshore income. We can deal with HMRC on your behalf, support you through the process and help you to put things right quickly and efficiently. Get in touch with our helpful team today.

If you have any questions about nudge letters, or have any tax issues in general, please get in touch on 0203 675 8122 or email Joe at joe.mcdermott@intaxltd.com.