Do you have a tendency to brag about the good things in life in your social media conversations on the social networks? Are you the kind of person who posts photos from your Caribbean holiday or shows off a new ‘super car’ that you’ve acquired? Well, be careful, for you are not just sharing that information with your friends but also the taxman, especially here in the UK.
HMRC (Her Majesty’s Revenue & Customs) have recently lobbied the UK Home Office for greater surveillance powers and access across the popular social networks. A certain amount of this activity already takes place, but the new Data Communications Bill could see anti-terrorism measures being put to use by the taxman in addition to the Security Services
In short, HMRC will be monitoring social networks for any obvious discrepancies between people’s lifestyles and what they submit as tax returns. So, if you’re a businessman who only pays £10,000 per year in tax but is often seen on social networks bragging about expensive watches and exotic holidays, you will be opening yourself wide for further investigation.
Obviously the morality of all this is open to debate. Surely it’s a good thing that HMRC can crack down on people who blatantly engage in aggressive tax evasion? Surely it’s a bad thing that Government is increasingly prying into our communication channels without any explicit consent from us or forewarning? However, the morality is almost an irrelevance, for this kind of surveillance is already happening and could become even more widespread and intensive.
You also have to ensure that you have your affairs in order if you regularly or professionally sell products on auction sites such as eBay and Amazon Marketplace, as HMRC will be proactively engaging and investigating such people to ensure that they are paying the right tax.
So what can you do about all of this? Well, here are 5 tips to help prevent a needless HMRC investigation:
1) Make sure that you are keeping your accounts accurately and honestly, and that you are paying the right amount of tax.
A good accountant will guide you through how you should record and file your affairs in accordance with current tax legislation, so your paperwork will be in order in the event of a HMRC inspection.
2) Keep on top of your financial paperwork.
New cloud-based accounting packages such as Prelude Accounts (from Diamond Discovery) allow small businesses to file their expenses, invoices and other financial transactions in real time and on the move. There’s no longer the excuse of putting off your paperwork.
3) Check your security settings on your social networks.
A lot of the popular social networks (such as Twitter) have default settings that make your posts as public as possible. You can restrict who can see your Social Media conversations quite significantly if you’re worried about too much personal information about yourself or your lifestyle getting into the public domain.
4) Be mindful of what you share.
Do you really trust everyone you are connected to on Facebook? Are you connected with any ex-employees with whom you may have an ambiguous relationship with, for example? If the answers to those questions are ‘no’ and ‘yes’ respectively, do not give away any ammunition that could be used maliciously or shared with third parties without your consent. Do people really need to know about your new Mercedes, for example? Also, why are you connected with people that you don’t entirely trust? Get rid of them!
5) Don’t dishonestly brag to impress or exaggerate the truth about your lifestyle.
Recent studies have shown that the vast majority of people exaggerate the quality of their lives and fortunes on social networks to impress their connections. If you are guilty of this, stop. If the HMRC really does become proactive in monitoring people’s material claims on social networks against what they have submitted for tax, those braggers are really inviting an investigation that is not needed. Aside from the stress and general inconvenience, imagine the general embarrassment when it turns out you’ve been lying to your connections all along.
Of course, if you are engaging in illegal tax evasion in a significant way, none of the above will really help or prevent you from being put under surveillance by the State (nor should it). But if you’re a genuine innocent who is a bit careless with their financial affairs and is prone to being ‘flash with the cash’ in general, you must now take the necessary precautions online to stop any misunderstandings that could cause you a lot of stress and embarrassment.
Nick Lewis Communications can provide training in social media marketing as well as offer professional management of social media feeds. To find out, please e-mail email@example.com or call 07970 839137.