A LEADING tax firm have said that Retailers using social media influencers to “advertise” their products may face unexpected tax bills.
Research from Blick Rothenberg shows that with the increase in online shopping due to the pandemic, companies are using online presences to sell products.
Fiona Fernie, a tax dispute resolution partner at the firm said: “The explosion of social media, and our constant interaction the worldwide net has led to a significant increase in using “influencers” to help sell products.
(Photo from Alexander Shatov on Unsplash)
“One of the ways they do this is to provide products to the influencers free, in exchange for a review on social media. Whilst this may appear to constitute a cheap form of advertising, there is a hidden cost – of which many retailers appear to be completely unaware.
“The problem is that the provision of goods to influencers is typically held by HMRC to be a taxable benefit which attracts both tax and national insurance contributions (NICs), even where the influencer is not an employee of the company providing the goods.
“ Providers of the goods need to set up a “Taxed Award Scheme” (TAS) with HMRC to deal with the liabilities on the goods they provide.
“ Retailers and others who provide incentives to social media influencers need to be aware of the issue and include the tax and NIC costs in their budgets. If they didn’t know about the issue, they need to act quickly and set up a TAS rather than wait for HMRC to ask questions.”
