Monday, February 2, 2009

HMRC investigating posts on social media

I picked up this news through Twitter * at the end of last year. Ok, I guess most readers of the TaxBuzz blog haven't previously encountered that micro-blogging medium. Nor do I think you need to as I've explained on my separate blog for ambitious accountants.

But this news does mean that you need to be more aware of what your clients could be doing online that is exposing them to HMRC scrutiny. In effect this new development is a natural extension of HMRC monitoring the small ads in local papers and more recently Ebay and other online 'auction' sites. We're also used to the stories of how HMRC staff walk around the streets in Wimbledon to see which home owners have let their home and/or gardens to tennis fans during the annual tournament.

Do you know which of your clients are promoting their hobby through social media such that they might appear to be trading? I'm referring here as much to the so-called 'non-working spouses' whose tax returns have always been simple and straightforward to complete.

Might there be evidence online of when a new trade started (earlier than was notified to HMRC)? Could your clients be incriminating themselves when talking about hobby activities without intending to do so? Maybe simply boasting or talking up their sales and business experience?

Your clients could be doing this using any of the HUNDREDS of different online social media websites and facilities.

Don't be misled. Many 'social networking' sites have a big focus on business as distinct from or in addition to 'social' activities. The most common of such sites are probably: Myspace, Facebook, Twitter, LinkedIn, BT Tradespace, Ecademy and UK Business Forums. In addition to these your clients may have personal websites and blogs (which can be quickly and easily set up for free) through which they are promoting what appears to be a business or a trading activity - eg: through affiliate sales (eg: for Amazon) or through a Google adsense programme. The possibilities are endless. Even Facebook provides business promotion facilities.

Maybe it's time to review the questions you will ask your clients about their trading activities when you start the process of collating information for next year's tax returns?
*Twitter is a micro blogging service that encourages users to simply Tweet their answers to the question - "What are you doing right now?" The potential uses of Twitter go a lot wider than this and there are many related websites and services that make it easier to use and to gain benefits from so doing.


  1. Hi Mark, hmm, thanks for the informative blog post on HMRC monitoring social media. It would be good to see something on this on the ICAEW's IT Counts too where there's been discussion on the value of Twitter to accountants?

    Best wishes

  2. Wow Mark now you have given HMRC a link they didn't know existed but then again they would probably have found it eventually. Of course Ebay & Paypal have certain drawbacks to HMRC and the unfortunate outcome is of course that HMRC might be monitoring items right now that won't manifest/womanifst until some 2 or 3 years down the line

  3. Er, Not quite Bill.
    They're already well aware of these things in certain quarters wihin HMRC.

    Actually, even if they didn't start to monitor for a few years the history book that this Google and the archive facilities on all the networking sites would still provide data as to what is being posted online now.