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Where Taxpayers and Advisers Meet

Receiving income via PayPal, very difficult scenario

Matthews8231
Posts: 2
Joined: Sun May 19, 2019 4:49 pm

Receiving income via PayPal, very difficult scenario

Postby Matthews8231 » Sun May 19, 2019 5:01 pm

Hello,

I am a freelancer and have started working as a partner in a site that sells digital subscriptions for a game, so they purchase digital content in the form of forum access and get certain rewards after that.

The website is a registered business in the US and the owner (i am not a listed owner) pays tax to the IRS, until recently all income we received on a weekly basis would be split 50/50 and the owner would pay tax on his income (50%) and i would receive the other 50% as a paypal payment, he would then declare that 50% i receive to be exempt from paying tax on the 50% of the business income.

I am in the UK and have a full time job too which i pay tax from the PAYE scheme, however the business has recently changed and we are no longer using merchants that he setup and are now using my paypal to handle all the subscriptions and in return i send him 50% in which he declares 100% of on his end (IRS).

Two fold question:

1: There is about $500 a week coming into the paypal account which fluctuates or which $250 of it is sent straight back out. How do i even go about starting to declare this, it seems that i cannot find anything online about this type of business and income.

2: Will this impact my normal day-day job at all in terms of my tax code and the PAYE scheme.

Do you recommend anywhere i can get face to face or telephone advice that is not monitored or logged as i really don't know what im doing currently so want to get advice first before i decide to continue with the online earning or cancel it without being scrutinized from the outset.

Thankyou.

darthblingbling
Posts: 253
Joined: Wed Aug 02, 2017 9:09 pm

Re: Receiving income via PayPal, very difficult scenario

Postby darthblingbling » Mon May 20, 2019 8:33 am

Sounds like a partnership to me, split the profits 50:50 and declare yours on your UK self assessment. This is taxable in the UK assuming you are UK resident. It sounds like you've not been declaring this historically so I would recommend you get help on this as penalties and interest may arise, so getting professional assistance may mitigate this as you don't want to be dealing with HMRC with your dick out.

There may be also a requirement to also file partnership returns in the UK, even if none of the profit arised in the UK.

https://www.gov.uk/government/publications/partnerships-foreign-aspects-hs380-self-assessment-helpsheet/hs380-partnerships-foreign-aspects-2016#partnership-consists-of-a-mix-of-uk-resident-and-non-resident-partners

Partnerships aren't admittedly my strong point however and there may be some concession in place that relaxes the reporting requirements if none of it is UK sourced. However, your share of the profits are still very likely taxable personally on you and you should be filing self assessment returns to declare your profit.

Matthews8231
Posts: 2
Joined: Sun May 19, 2019 4:49 pm

Re: Receiving income via PayPal, very difficult scenario

Postby Matthews8231 » Mon May 20, 2019 10:15 am

Thanks very much, i develop a plugin that the forum subscribers have access to which is a game plugin, i dont really have any business costs of my own as i use Visual Studio Community edition and my own laptop etc. Not really sure if anything that i can mark as a business expense on my end so its 100% profit in other words though i do occasionally outsource some works to freelancers but again difficult to track and prove.


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