As part of its latest attempts to keep up with the rapid expansion of the digital economy, HMRC is sending nudge letters to online content creators who make money or receive gifts for posting material on platforms such as Instagram, TikTok and YouTube.

Digital platform reporting to tax authorities

From January 2024, the Model Reporting Rules for Digital Platforms means that digital marketplaces, such as Airbnb, eBay, and Vinted, will have to report incomes of individuals earning money via their platforms. The goods and services covered by the reporting requirement include accommodation, transport rental, personal services, and tangible goods. The information on income will be sent to the tax authority where the seller is a resident and platforms will also provide a copy of the reported information to the seller.

The first report is due on 31 January 2025. This is in addition to self-employed individuals submitting their income to the tax office on their Self Assessment tax return. Penalties will be applicable should the digital platform not comply by the due date.

As such, any discrepancies between the Self Assessment tax return and the Model Reporting Rules for Digital Platforms may lead to an enquiry by HMRC, so keeping detailed records of all income received from such platforms is imperative. The gig economy has really grown in the past few years and this is the latest attempt by HMRC to tackle non-compliance.

Stay tax compliant

If you have found an omission in your tax filings, we recommend seeking an experienced tax advisor to prepare a voluntary disclosure to HMRC. Making an unprompted disclosure will mitigate any potential penalty charges. If you need further assistance on the above, or for advice on nudge letter correspondence, contact Danielle Ford, Partner and Head of Tax Disputes & Resolutions, or Riocard Hoye, Senior Manager.