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Newsletter issue – February 2023
HMRC is writing to online sellers, gig economy workers, and influencers, asking them for unpaid taxes.
There are two versions of the HMRC letter.
- This letter is directed to those who sell goods, or their own services, through an online marketplace. This will include people who sell items on eBay or Etsy, as well as taxi drivers who find their customers through apps such as Uber.
- This letter is addressed to people who have created online content, and who generate money from that, such as authors and influencers.
HMRC is only writing to those individuals who it believes have received more than £12,570 from online sales in a single tax year, and thus may owe income tax. The periods when the income was received are likely to be the tax year 2020/21 or earlier.
If you receive such a letter, it doesn't necessarily follow that you have tax to pay. The income reported to HMRC by the online marketplaces will be a number of gross sales. You may also have deductible expenses to set against that sales income, including the use of home allowances.
You may receive one of these letters when you have correctly declared all of your income to HMRC. It is possible that HMRC has not checked your tax return before dispatching the letter.
If you have under-declared your online sales income, HMRC asks you to make a full disclosure using the online digital disclosure service (DDS) facility and return a certificate of tax position within 30 days.
You should reply to HMRC within the deadline given, indicating how you plan to provide the information required. You can reply by letter, by phone, or by completing and returning the certificate of the tax position, once you have spoken to an experienced tax investigation expert.
