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HMRC is turning its attention to online content creators, including those on OnlyFans. If you’ve received a letter from HMRC, our Tax Dispute Experts share what you need to do, along with how we can manage the process and help bring matters to a conclusion, minimising tax, interest and penalties.
Do You Have to Declare OnlyFans Income in the UK?
Yes, income earned from OnlyFans must be declared to HMRC. In the UK, all income is potentially subject to tax, and that includes earnings from digital platforms like OnlyFans. If you are generating income from subscriptions, tips, or other services on OnlyFans, you are required to declare that income to HMRC as part of your Self Assessment tax return. Failing to declare this income could result in penalties, interest on unpaid taxes, or even an HMRC investigation.
If you’ve received a letter from HMRC, it could be because they’ve obtained information from OnlyFans as part of new regulations requiring online platforms to share data with tax authorities. Here's what you need to know:
What Types of Income Are Taxable on OnlyFans?
You must declare all income generated from:
Subscriptions: Any recurring payments from fans subscribing to your content.
Tips: Gratuities provided by fans through the platform.
Pay-Per-View Content: Revenue earned from content behind a paywall.
Collaborations and Sponsorships: Any promotional deals or collaborations with brands.
It's also important to keep accurate records of your income and expenses, as HMRC may ask for supporting evidence if they believe your earnings have been underreported.
Why Have You Received a Letter?
Beginning 1 January 2024, as part of the UK's involvement in the Organisation for Economic Cooperation and Development (OECD) agreements, digital platforms including eBay, Vinted, Airbnb, and OnlyFans are required to collect and share information with HMRC. This measure is designed to identify individuals who have not properly declared their taxable income.
If you’ve received a letter from HMRC stating, "We have information that shows you've earned money (income) from online marketplace sales,” it means HMRC may have been analysing data from OnlyFans to identify if you have underreported or failed to report your online earnings.
Other reasons for you receiving a letter may include:
Discrepancies in tax returns
Fluctuations in income or expenses
Late filings
Unusually high expenses
A lifestyle that doesn’t align with reported income could suggest undisclosed earnings.
Steps To Take If You've Received a Letter from HMRC
Receiving a letter from HMRC is concerning for OnlyFans creators, but taking proactive steps can help you address the issue effectively and minimise potential penalties. Here are the steps you should consider:
Begin by thoroughly reading the letter from HMRC. Pay close attention to what information is being requested and the deadline for your response. Ignoring the letter can escalate the situation, leading to further investigations and increased penalties.
Review Your OnlyFans Income: Scrutinise your earnings from OnlyFans to ensure all income has been accurately reported to HMRC. This includes revenue from subscriptions, tips, pay-per-view content, and any other income streams through the platform.
Consult a Professional: Understanding HMRC's requirements and maintaining compliance can be challenging. Our team at Tax Dispute Experts is ready to assist you. We can help you navigate the process, ensure your disclosure is accurate and complete, and negotiate any potential penalties on your behalf.
How We Can Help: Tax Dispute Experts
Our team of specialists have extensive experience in handling disclosures and resolving tax disputes. If you've received a letter regarding income from OnlyFans, we will:
Conduct a thorough review of your tax affairs to identify any discrepancies and ensure all online earnings are accounted for.
Prepare and submit your disclosure to HMRC, ensuring it meets all requirements and minimizes any potential penalties.
Negotiate with HMRC to achieve the most favourable outcome if penalties are assessed.
Procedure of an HMRC Investigation
During an investigation, HMRC will follow a structured process. First, they will notify you of the investigation and request relevant information. You will have the opportunity to challenge the investigation if you believe it is unwarranted. Following this, HMRC will review your documents and may ask for additional details if needed. Finally, they will assess your compliance and identify any discrepancies.
What Are the Potential Outcomes of a Tax Investigation?
The outcomes of a tax investigation generally fall into one of four categories:
No Further Action: If HMRC finds no evidence of wrongdoing, the case is closed with no further action required. Demonstrating that no tax, interest, or penalties are owed can be facilitated with the help of a tax investigation specialist.
Additional Tax Assessment: If HMRC determines that additional tax is due, they will issue a bill that includes the tax owed, plus any penalties and interest. A tax investigation expert can assist in negotiating a time-to-pay agreement with HMRC or help dispute any penalties imposed.
Settlement: HMRC may propose a settlement where they agree to accept less than the originally assessed amount. Having a tax investigation specialist can increase the likelihood of reaching a favourable settlement.
Criminal Charges and Imprisonment: While rare, criminal charges and imprisonment are possible outcomes. Involving specialist advisers early in the process can help avoid criminal prosecution and the risk of imprisonment.
Contact Us
Need assistance with an HMRC enquiry? Contact us today to speak with our Tax Dispute Experts and protect your interests.