Social Media Platforms Spreading Widespread Tax Misinformation, Study Finds

Social media platforms have become breeding grounds for misleading tax advice, with potentially serious consequences for unsuspecting users, according to recent findings from accounting firm RSM.

The firm has identified numerous videos across social media platforms containing dangerously misleading tax information reaching hundreds of thousands of viewers. This troubling trend follows RSM’s earlier report on how TikTok was being exploited by questionable “tax advisers” promoting dubious tax avoidance schemes.

One particularly concerning misinformation campaign claims taxpayers can legally refuse to pay taxes on the grounds that tax revenues fund “illegal wars.” One such TikTok video garnered over 200,000 views, with similar content spreading across multiple platforms. RSM emphasizes that this advice is completely false – withholding tax payments from HMRC could result in significant interest charges, penalties, and even criminal proceedings.

In another alarming case, a video with more than 600,000 views on a popular podcast’s TikTok profile advised viewers to form limited companies and reclassify personal expenditures such as holidays and meals as “business expenses” to reduce taxable profit. This advice grossly misrepresents UK tax law and could lead viewers into serious legal trouble.

“The reality is that HMRC is well aware that some may seek to put what are truly personal expenses through a company’s books and police this issue accordingly,” noted RSM in their report. Those following such advice risk substantial penalties and interest charges. More seriously, deliberately claiming unauthorized tax relief or repayments could constitute tax fraud, potentially leading to criminal prosecution.

The high engagement rates with this misleading content indicate that many members of the public are not only viewing this dangerous advice but potentially acting upon it without understanding the severe consequences.

This trend emerges at a particularly vulnerable time for UK taxpayers. HMRC recently announced plans to close its self-assessment telephone helpline for six months each year – a decision only reversed following intervention from the Chancellor. The tax authority’s resource constraints have led to efforts to reduce direct taxpayer assistance, potentially creating an information vacuum that unregulated social media “experts” are filling.

Meanwhile, HMRC is working to regulate the market for tax advisors and raise professional standards. However, this process takes time, and many taxpayers who cannot afford qualified professional advice may turn to free but potentially hazardous guidance found online.

The problem highlights a growing tension in the digital age: as regulatory bodies struggle with resource limitations and traditional communication channels become less accessible, social media platforms with minimal content moderation become default sources of financial advice for many.

Tax professionals are increasingly concerned that the combination of reduced official support, economic pressures, and the proliferation of unverified tax “hacks” online creates a perfect storm where well-meaning taxpayers could inadvertently break the law.

The situation underscores the need for greater digital literacy regarding financial advice and potentially stronger oversight of tax-related content on social platforms. It also raises questions about how regulatory bodies like HMRC can effectively combat misinformation in an era when their own direct communication channels with taxpayers appear to be contracting.

For taxpayers seeking guidance, the safest approach remains consulting qualified tax professionals or using HMRC’s official online resources rather than relying on unvetted social media content, regardless of how compelling or widely shared it may be.