HMRC Cracking Down on Influencers
Attention social media influencers, gamers and online traders – did you know that our nearest and dearest neighbour in the UK, His Majesty’s Revenue & Customs, is currently chasing down unpaid tax from an assortment of over 4,300 social media influencers, gamers and online traders?
According to our favourite UK periodical of note, the Financial Times, HMRC is sending nudge nudge wink wink letters to online earners and influencers receiving freebies from businesses in order to promote their products.
The tactical exercise is to send a signal to online earners that HMRC is watching and playing catch up with the digital economy and won’t be going soft on chasing down unpaid tax from them. In addition to influencers, YouTubers and TikTokers, HMRC will be sending 2,000 further letters to people who make a few quid selling products and services through online marketplaces like Etsy, eBay and Facebook. It is noted that OnlyFans is not included in the HMRC statement.
The amount of tax HMRC expects to gain from this particular exercise is low, but it is clearly sending a signal to people earning a living online that they will be tracking them down and taking a much firmer stance on this in the future.
The Financial Times reports that around 2.8 million influencers earned about £120 per hour on average over the past few years. It is unclear how many of these are paying tax. Therefore, writing to 6,300 people won’t even be a ripple in the ocean.
However, this is a strong signal that the authorities are beginning to get a handle on influencers paying taxes. Many of these people may not even know that they are liable for tax. They are usually young and their incomes evolved from hobbies which started small and gained traction quickly.
This is likely to be a huge problem for both HMRC and, the Revenue Commissioners here in Ireland. There will be a mountain involved in tracking these online earners down and calculating how much tax they owe. These are not bricks and mortar businesses.
Online earners in the UK have a choice of completing self-assessment tax returns or setting up companies and paying corporation taxes.
That begs the question, especially when the UK corporation tax rate is 19%, will we see a flood of UK influencers moving to Ireland and paying a much lower level of corporation tax?
