HMRC targets savvy online sellers: what you need to do

As online platforms prepare for new disclosure rules on transactions, Danielle Ford, partner at haysmacintyre, warns that HMRC has already started compliance checks on the highest reported earners 

Following the UK’s agreement to the OECD’s global data sharing objective to tackle worldwide tax evasion, HMRC will now be able to access seller information on online platforms.

Platforms such as Etsy, Vinted, eBay and even media platforms such as Instagram and Only Fans, are required to collect sales and income information from their sellers and influencers to share with HMRC.

In addition, platforms which provide services such as Uber, Deliveroo and Airbnb, will also have to share their data on any services which receive payment. Interestingly, it is the younger generation which takes advantage of using online platforms to generate extra income.

Whilst platforms will not report their first full year of data until January 2025, HMRC has already kickstarted compliance checks on the highest reported earners in previous years. Once again, HMRC has implemented a change without providing coherent guidance or a structured approach.

Thus far, online sellers and influencers have faced rigorous and unchartered internal reviews by HMRC, usually conducted by a compliance officer who might have thought ‘TikTok’ was just a Kesha song…

‘TikTok’ on the tax return clock

Not all sellers have to file a tax return. Despite the media attention, it does not apply to everyone.

It is important to note that income tax is not new, this data is just a new resource available to HMRC to view online information which provides more visibility on potentially supressed income.

Therefore, it is important to stay on top of your sales, expenses, and side hustles.

As this is a global data share initiative, HMRC will be able to share this information with other tax authorities who have also signed up to the agreement, and vice-versa.

For example, if you live in the UK and your Only Fans account is earning in the US, an exchange of data on your income can be made between the US Internal Revenue Service (IRS) and HMRC.

This is a simplified example, but it is important to consider when reporting your tax return, particularly if you are earning in different currencies – the figures will need to be converted to GBP.

Influencers should also be aware that a sole trader should be VAT registered if the value of their sales take them over the VAT threshold (currently £90,000). Platforms are not responsible for reporting VAT liabilities and the value of ‘gifts’ received from brands or followers can be included in the VAT threshold calculation.

Many influencers are not aware that if gifts are given for the purposes of promotion, the value of the gifts may be included in the VAT registration threshold calculation, therefore making them liable to be VAT registered and subject to VAT compliance checks.

Furthermore, the businesses gifting the product are also liable for reporting the VAT on the gifts they supply, leading to them also receiving a VAT assessment.

The rule of thumb is that platforms will only send your information to HMRC, and you will only need to complete a return, if you fall under one of two categories:

  • you’re selling 30 or more items a year; or
  • your earnings exceed the taxable income threshold of £1,000.

If either of these provisions apply and you are trading, not just selling your pre-loved clothes, a tax return should be filed.

Missing tax returns

If a return hasn’t been filed for previous years for which this is also applicable, an unprompted disclosure to HMRC should be considered now.

HMRC states that the onus is upon the taxpayer who ought to have known to report this income previously, even though they did not provide any guidance at an earlier stage when online platforms first allowed anyone to make a profit.

On this basis, HMRC has still been imposing penalties on those who make a disclosure.

Furthermore, for those selling a high value or luxury item on platforms such as eBay or Amazon, you may have to report this to HMRC as a capital gain rather than income tax, if it exceeds the threshold of £6,000.

Airbnb and rent-a-room relief is also a grey area. You can only claim this relief if you meet certain conditions, the first being rental income of £7,500 (halved for joint owners) and critically that the property is your main or only residence.

For example, if you live in your primary residence in London but have a holiday home in Cornwall that you rent as temporary accommodation on Airbnb, this will not meet the conditions for the relief, and you are obliged to report your earnings as part of your income tax assessment.

Furthermore, in the Spring Budget 2024, the UK government announced that it was also intending to abolish the furnished holiday lettings (FHL) tax regime. This will aim to remove the tax advantage from those who let furnished properties for a short term.

HMRC rules no glam for the ‘Gram’

If you are required to submit a tax return for your side hustle income, you are entitled to claim a deduction for relevant business expenses.

Compliance checks thus far have indicated that HMRC has been particularly strict in its approach on what is an ‘allowable’ expense.

Legislation states expenditure must be ‘wholly and exclusively’ for the purpose of the trade. This has become a contentious issue, as HMRC is applying expenses regulations based on a precedent from a tribunal outcome predating the invention of social media (Mallalieu v Drummond (1983)).

The reality is that the application of compliance is being conducted without any updated legislation to reflect changes in employment, technology, and expense requirements.

For example, influencers who are required to purchase specific branded clothing or cosmetic products for their business, and conduct their business solely based on appearance, are facing backlash and rejections from HMRC.

If you are required to complete tax filings, seeking professional advice is advised. It is particularly crucial as an expert will be able to advise on expenses, potential tax reliefs, and to guide you through the process.

 

 

 

 

Bank details being changed on HMRC portal in VAT scam

Accountants are warning companies to be extra vigilant as there has been a surge in fraudulent activity affecting VAT repayments from HMRC

Certain sectors are being especially targeted including businesses in food, farming, construction, and export-heavy organisations.

The recent cases involve the changing of bank account details on HMRC’s portal, with VAT repayments then diverted to a third-party.

Fraudsters are disguising themselves as taxpayers to alter bank account details on HMRC’s online portal.

HMRC is seeing an increase in fraudulent activity, according to information obtained by property VAT authors Martin Scammell and Chris Nyland.

HMRC is aware of the issue and is asking those affected to report the fraud, providing the reference of the affected VAT registration number.

In an attempt to stop the fraud, HMRC has also announced plans to withdraw the PDF version of form VAT484 – the form used to amend and update VAT details such as bank accounts.

Gary Frear, agriculture expert and partner at Price Bailey warned that the scam presents a real risk to the farming community.

‘Given that the majority of farming entities are receiving monthly or quarterly VAT refunds, it is essential for the cash flow of the farm to continue receiving these refunds without interruption,’ said Frear.

‘We are also now entering a period when farms are typically purchasing inputs like sprays and fertilisers and the refunds could be much larger.’

Greg Mayne, a VAT partner at Price Bailey, added: ‘HMRC are aware of the recent spike in fraudulent activity and are said to be dealing with these. They are also suggesting that larger businesses have been the primary target and are asking these organisations to confirm the authenticity of any account changes.

‘Despite this, we are hearing some smaller businesses have also been affected and so, for the time being, taxpayers submitting repayment claims must be especially vigilant and check that their bank account details have not changed.’

Treasury gives HMRC £51m to improve helplines

Following months of deteriorating service on helplines, the Treasury has increased funding by £51m to bring HMRC’s phoneline service back up to 85% of calls answered

Nigel Huddleston, financial secretary to the Treasury confirmed the new funding in a statement to parliament, pledging that the money would address the current 66.6% calls answered rate.

‘The government is providing HMRC with £51m in new funding to bring HMRC’s phoneline service back up to the published target of 85% of calls to HMRC advisers being answered,’ Huddleston said.

‘The additional funding enables HMRC to meet the performance standards on its phone lines that its customers expect, while continuing the transition to a digital first model of tax administration.

‘The government is fully committed to providing HMRC with the resources it needs to meet the needs of all its customers, and will continue to do so.’

Performance at HMRC call centres has to improve substantially if they are to achieve an 85% answer rate.

In February 650,000 phone calls were abandoned, while 2.9m people tried to call HMRC. In total only 66.6% of calls were answered while a third were left hanging. Of those who called, 947,000 taxpayers listened to the recorded messages while waiting to speak to an adviser and went to the HMRC webchat to find an answer to their query.

The additional funding comes on the back of HMRC’s decision to close the majority of helplines, which was reversed within days of the announcement in March due to outrage from taxpayers, professional bodies and even the Chancellor Jeremy Hunt.

Speaking at a Treasury Committee hearing days after the decision to reverse the closure, chief executive Jim Harra said HMRC was stunned by the ‘strength of feeling’ on helpline closures.

Harra told MPs: ‘There was a strength of feeling from stakeholders that we did not expect. Our strategy is still digital first but we are not proceeding with the changes announced on 19 March. We will engage with stakeholders – we need to go through all the concerns that stakeholders had.’

He also admitted: ‘Ministers certainly expressed their concern about the reaction and genuine concern about how this would work.’

However, Harra stressed that HMRC was unable to provide an adequate phone service with the current level of staffing at the tax authority.

Harra said: ‘Given that we are not going ahead with these closures, we need to deploy more helpline resources.

‘We do not have the funding to do this but we are in discussion with ministers about our plans to produce the best level of service that we can after not going ahead with the decision of 19 March.

‘The response will have to be that we deploy extra resources on our phonelines and whether that is through additional funding or reprioritising other services.’

Last year HMRC received over three million calls on just three issues that can easily be resolved online: resetting an online password, getting a tax code, and getting a National Insurance number, Huddleston said.

‘Shifting customer contact such as this to online interactions is helping to, and will continue to help, reduce demand on phone lines and allow HMRC to prioritise calls for those who really need to speak to an adviser,’ said Huddleston. ‘This is a fine example of a tangible way to improve public sector productivity.

‘This digital first strategy is the correct long-term vision for tax administration. In support of this, the Chancellor invested over £136m in the 2021 Spending Review to enable HMRC to enhance their digital services. HMRC received a £900m cash increase over this parliament, from £4.3bn in 2019-20 to £5.2bn in 2024-25.’

Harra stressed that the priority for HMRC is a transition to digital first services: ‘We remain committed to expanding our online services, and encouraging customers to go online where they can, as we strive to deliver good services as cost-effectively as possible. But we recognise this must happen at a pace the public is comfortable with.

‘This additional funding will enable us to improve our helpline service for those who need to speak to us – including the vulnerable and digitally excluded – making sure they get the support they require,’ he said.

Responding to the funding boost, Caroline Miskin, ICAEW senior technical manager, digital taxation, said: ‘We are pleased that the government has recognised that HMRC is in desperate need of more funding to address poor service performance. While the £51m may not be enough to meet demand, it is a good start.

‘Given the need to find and train up staff there will be a lag before any improvements are seen, so any boost to HMRC customer service from this funding is unlikely to be seen until the autumn and service levels may drop in the meantime.

‘We fully support HMRC’s move to digitalise the tax system and move more interactions online. The problem continues to be that online services are not comprehensive and don’t always work well. HMRC needs to step up delivery of digital services while maintaining traditional services during the transition.’

 

 

 

 

Accountants in Glossop Launch Powerful App | Harrison Hinchliffe Accountants in Glossop

It’s landed!

The Brand new App from Harrison Hinchliffe Accountants

As a firm we are constantly looking for ways we can improve the service we offer our customers and we are proud to announce the launch of our brand new Harrison Hinchliffe Accountants App.  It’s completely free of charge and it’s available for iPhones, iPads and Android devices.

So the next time you need to look up a tax rate or work out a VAT calculation, our new App can help.  It provides you with up to date, important accountancy data at your fingertips.  PLUS:

Photo Receipt Management, Email and Store

Never lose a receipt again! Using the latest App, you can track receipts and expenses literally at the touch of a button. With minimal effort you can take a picture of any receipt and save it to your App. Any additional information can be added later and receipts stored by amount, category, and date. It can help you track all your expenses with ease and enable us to interact digitally with you.

GPS Mileage Tracking and Management tool

When it comes to mileage tracking, half the battle is keeping an accurate tab on your journeys. Using the built-in GPS on your device, it will automatically track your mileage, helping you to record every single trip at the touch of a button. It also manages trips as well, storing them and allowing you to view, edit or email them with complete ease.

Keeping in touch via ‘Push Notifications’

As a firm we are committed to finding ways to communicate and interact with clients in the most efficient possible way.  The new App enables us to send push notifications to all App users.  We will be using this feature to share important news, deadline reminders and financial updates with you.

This App was designed to provide every service you could ask from us. We’ve put your favourite business systems, invaluable tools and features such as calculators, tax tables, logbooks, receipt and income management, instant access to the latest financial news and information and valuable company info, directly from us. With all this on one App, our App will likely be your go-to tool in the future.

It’s available for iPhone, iPad and Android devices completely free of charge right now! 

Enjoy our App with our compliments and you can download by clicking the app image below

Why Harrison Hinchliffe Accountants Clients Love this Free App | Our New App

It’s now 4 weeks since Harrison Hinchliffe Accountants launched the new iPhone and Android App.  Since then, clients and contacts have downloaded it across Glossop.

The App has generated some fantastic feedback from users enjoying its many features for free. 

It’s also helped Harrison Hinchliffe Accountants get recognition for being a proactive firm of accountants that is prepared to reach out to its clients in an innovative manner.

The 5 things that clients enjoy the most from the App are: 

  • Photo receipt and management tool – never lose a receipt again!
  • GPS Mileage tracker
  • 15 + Free calculators from income tax to inflation: it’s all there
  • Helpful, handy Tax sheets
  • Key Tax Dates

So if you haven’t got your copy of the App yet, it’s available right now for iPhone, iPad and Android devices.  Simply click on the relevant link below or scan the QR code.

Enjoy!

QR Code Download App

How to close Apps in iOS on the iPhone, iPad or other iOS devices

How to close Apps in iOS on the iPhone, iPad or other iOS devices

As more and more of our clients are using iPhones, iPads and other iOS devices, we want to blog about closing Apps in iOS.

Your smartphone or iPad is a hardworking tool, capable of literally almost anything, including of course running our latest free App – you can get that here

https://itunes.apple.com/us/app/harrison-hinchcliffe-accountants/id1177013612?ls=1&mt=8

http://play.google.com/store/apps/details?id=uk.co.myfirmsapp.hh

Telephone calls happen to be a small part of what most of us use our Apple devices for these days. More frequent use includes emails, Apps, directions, purchasing equipment and thousands of other tasks. After carrying out hundreds of App demonstrations with financial services firms, it has become clear that many users were unaware that their phone was running Apps in the background.

Why bother closing Apps?

What many people do not realise is that by allowing these Apps (sometimes twenty or more) to run in the background, they are wasting a huge amount of the device’s processing speed and battery life. No wonder they have to keep recharging.

Some users we spoke to had never closed a single App – ever! That meant they were running a high number of Apps, slowing their device down and reducing its battery life and length.

How to close an App in iOS and later OSes:

accountancy app image007

To close down those sneaky background Apps in the new operating system is much easier than in previous versions. The first step is to access the task bar on the device.

Simply press the ‘Home Button’ twice, quickly:

If you are used to previous versions of IOS, then the first thing you might notice is that the home button no longer shows you a drawer with the icons of open Apps.  Instead you will see ‘cards’ that contain a screenshot of each of your open Apps.  Beneath these card images you will see the App icon. In the example to the left you can see 3 open Apps.

You can swipe in either direction between the Apps.  Swiping all the way to the left will take you to the image of your home screen, whilst going to the right reveals more open Apps (if you have more open).

Tapping on the App image will then launch or return you to that App.

To close the App (or force an App to close that’s unresponsive) is actually very simple, although it isn’t immediately obvious.

All you need to do is place your finger on the image of the App you wish to close and drag your finger upwards (forwards).  This will drag the App upwards on your screen and it will fly off and close.

This simple process will dramatically speed up the iPhone, iPad or device and extend the time it will run on a single charge.