How much is Katie Price earning to owe HMRC so much?

[UniqueCrow]

My understanding is that she owes hmrc £750k. Ok I'm sure there are penalities etc but surely everything is done via her company etc so she's paying minimal tax etc.... but who's actually paying her to do anything?

I don't think she's done anything other than books, perfume, game shows, tv etc.... And spent loads on her boy etc, but the past five years I don't think she's done anything note worthy? Everything seems to be for free and online, eg newspapers etc.

Only Fans is where most of it comes from.

She is always promoting stuff on Instagram....

She only joined 2022 and hmrac are chasing her from 2020-21 and subsequent year bill

If she's paid via a company, her company will need to pay corporation tax. Which will be a percentage of the lot of money that her company brings in. Presumably this is the bulk of the tax she owes?

It's not as simple as claiming that the money is earned by her company not her so it doesn't need to be taxed, of course it does.

Money will be early by her company and she should have a decent accountant.

The debts being chased are from her hey day, when she was earning the big bucks.

I don't think she makes much from the likes of Onlyfans. It's a saturated website.

It's from 2020-21 and 2021-22 tax years

"the court was told she owed £142,405 in tax for 2020-2021 and £196,735 for 2021-2022.
The judge said she also owed £140,000 in unpaid VAT and added:’ As with the unpaid tax no payment has been made"

I'd imagine a lot of it is interest. A family member ended up owing HMRC a lot of money due to unpaid corporation tax and the associated interest, they went bankrupt in the end.

Any idea why they didn't pay the tax?.

They probably spent it on beer, fags, boob jobs and holidays.

I think, what happens is that you have a person, could be a media personality, sports person (similar has happened with boxers). They have an entourage: coach, personal trainer, stylist, driver etc. All these people get paid.

Normally the entourage would separately have a number of clients and be self employed but as the client's career rises they end up working exclusively for the media personality, sports person.

HMRC looks at the entourage and says these people are employed not self employed therefore they have been paid net, the employer owes us the tax & NI. Big tax bill gets issued to media personality, sports person.

This is just one of the ways KP could have ended up with a big tax bill.

Surely though either

Person is self employed and does own tax return

There is no tax return and therefore they are employed and tex and NI is owed.

HMRc can't just decide to charge tax on a persons income twice?

Or am I missing something?

But if 'Katie Price Limited' employs staff, they're on PAYE so every time they get their monthly salary, there will also be an amount due to HMRC for their tax and NI (both employees and employers).

The company would need to put aside that money, along with money for corporation tax, which will add up to a significant amount. If this is not been done, the money won't be there when the bills are due.

People also behave as if the money will continue to roll in and rely on future income that may or may not arise. If it doesn't there will be a problem when the tax bills are due, which could be up to nearly 2 years after the money has been earned.

Imagine how much money it takes to be Katie Price. Normal day to day living costs that are probably much higher than the average person, plus travel, cosmetic surgery, staff costs etc etc. And all the tax on top. If the money isn't coming in, it can get messy very quickly.

Being self employed is determined by a number of things, not simply registration. If the entourage have not been doing their own tax returns and the terms under which the entourage work look like employment rather than self employment then HMRC will follow the money.

Can some of this liability be unpaid/owed from previous years?

I do not follow this woman's career closely, but she is on telly a lot! Wikipedia says she has had 20 years of reality shows on telly, getting paid for that. She has written (or put her name to) dozens of autobiographies and children's books. Her IMDB page says in 2022 she had a series called "trauma and me", she's done podcasts, 113 episodes of Loose Women, 41 episodes of This Morning etc etc. Won Celeb big brother in 2015 and would have done a lot of telly on the back of that. Then you have all the stuff she puts her name to - fragrances, horsey stuff. And the personal appearances, "glamour" work, interviews in OK/Hello....

It all mounts up. Now if you're a sensible self-employed person, or hire a proper accountant, you're keeping back 40% of what you earn for tax. If you're a numpty, you spend the lot then get into problems with HMRC.

Thankyou for explaining.

I appreciate when people take time to answers questions rather than be snippy because someone asked.

That makes sense now

edited out a silly comment.

Once you owe Hmrc the penalties can be huge. A family friend owed 5k. He messed around loads, defaulting and what not. In the end it rose to 45k and this was twenty years ago

I have been a freelance consultant for years and operate on a limited company basis. It is staggering the number of people I have met who have set themselves up as contractors but do not have a clue about corporation tax, VAT, dividend thresholds and all the other requirements for running a company. They would rather listen to the bloke down the pub for tax advice then spend a small amount on an actual accountant so it is hardly surprising that they end up using their business account like a personal account then get into trouble with HMRC.

She could be earning £50k for one instagram product post/ story. More for an actual long term deal.
She flogs stuff on tiktok, all the small appearances/ interviews/ candid paparazzi photos - She gets paid for all of this.

Even though she not doing any big work I think she's still doing enough to earn a lot of money. She did have a TV show about her dirty house quite recently too.

I also wonder if when she gets gifted surgeries/ holidays/ home reno etc. She has to pay the tax as a benefit as she the advertises the product.

@itsgettingweird I'm an accountant (though not a tax accountant). Some years ago I was reading about a similar scenario though in that case it was a boxer. The details of how they had got to that point stuck with me.

Once you establish that the entourage are employees then gifts can become benefits in kind and therefore taxable. The car the gofer has been given so that they can run errands becomes a taxable benefit.

The 'talent' if they are young/naive can find themselves in a total mess.

It's likely being her accountant's not straightforward either if she is given lots of freebies that are taxable benefits - for each thing they'll have to decide whether it's an expense or equivalent to income and work out the value and amount of tax due