Online sellers, influencers and vloggers who sell or post on a regular basis in order to make a profit but may not be paying tax on this income may receive the letter. The letter will remind people of their legal obligation of declaring profits and suggests that they use HMRC’s Digital Disclosure facility if they haven’t reported their profits or earnings before.
HMRC have been working with a number of online platforms to gather details and is using the letters as a nudge exercise before a new system of transaction reporting by online platforms begins. HMRC have data on individuals using sales platforms, influencers, vloggers and other content creators who use online platforms.
New regulations will be published by HMRC later this year that will require online platforms to report on the transactions carried out through their sites.
If you make a profit from selling goods online or earn an income from online activity and live in the UK, this profit is taxable and must be reported to HMRC through a tax return. Income from creating content on digital platforms is also taxable. It must be declared and any tax due paid over to HMRC, even if it is not your main source of income.
If you do already report all your profits and earnings from online platforms and other sources, there may be nothing to worry about, but if you have received a nudge letter, now is the time to check that everything is in order.
If you do not already report or are not registered with HMRC, now is the time to do so. The letters suggest that people make a disclosure through its Digital Disclosure facility, but there may be other ways to make the tax disclosure, depending on your circumstances.
We recommend that you seek professional advice as soon as possible to ensure that it doesn’t lead to any unexpected surprises in the future. Our team of tax specialists are available to guide you through the process.