OnlyFans Could Face Bill Of Over Three Years' Worth Of Unpaid Taxes
The content subscription service began charging VAT for the first time last week, but Her Majesty's Revenue and Customs (HMRC) is now believed to be investigating whether the company should have been collecting VAT since it launched in 2016.
If HMRC finds the company has been deliberately evasive with its tax returns, it could be handed a penalty worth double the tax owed.
OnlyFans is a platform where people can share exclusive content in return for a monthly subscription fee and is particularly popular among amateur pornographic models.
The company states that it takes 20 percent of subscription fees, with the rest going directly to content creators. As such, if the HMRC determines the company should have been collecting VAT since it began operating - which is almost always charged at 20 percent - it would have to hand over all of its UK income to cover this.
OnlyFans told LADbible: "Following continuous communication with UK tax authorities, we have implemented changes to the treatment of our UK/EU income from 1 July 2020.
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"This represents a change of basis for VAT purpose, making OnlyFans the Principal on the sale as opposed to the agent. This is due to a recent interpretation of an EU law by the HMRC.
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"Within the communication with HMRC our tax position since inception is being reviewed. We have previously been paying VAT on the basis of being an agent.
"Our UK and EU customer base is an extremely important part of OnlyFans, however any potential tax obligation arising from the switch of VAT basis would not have an impact on the continued operations of the business."
However, HMRC said there had been no recent changes to the VAT rules relating to electronically supplied services and digital platforms, adding that current UK VAT rules correctly reflect EU VAT legislation.
An HMRC spokesperson told LADbible: "We are unable to comment on an identifiable business. We ensure the tax system is fair for all businesses and that companies are paying all the tax that is due, reflecting the value they get from UK users."
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Topics: UK News