Looking for some advice. Foreign income, taxes and law. Oh My.

[Undefined]

Hi all,

I must say I'm really pleased I stumbled across this forum on my search for information, I've managed to garner a lot of advice simply reading past threads.
Here's my situation. It's a rather sticky one.

I've been working freelance for about 3 years now as an online game developer. I work from home in my own time creating those little web games you see all over the internet. I then talk to various companies and sites that host these games, mostly in the US and obtain a sponsorship payment from them in return for logo placement, distribution rights and a period of exclusivity.
After this exclusivity I then talk to other sponsors, portals and sites and sell them a non-exclusive license, replacing the logos and branding and giving them the rights to host this game on their own site only.

Another form of income I have is often I will display adverts within the game which yields minor advertising revenue, along with various competition prizes.

Anyway, situation explained, here's my questions.

I've been doing this for 3 years and I haven't registered for tax or filed a return in that time, Ideally I could claim complete ignorance but I've known for some time that I should, just had no idea what course of action to take in order to or what exactly my options and obligations are.

I've recently finished up a large deal and will soon have the funds available to get this mess sorted out. Mostly because I'd like to some time soon obtain a mortgage rather than renting my property. I will be consulting an accountant for advice soon, but want to get a little head start and build up a little knowledge on the subject.

I've done a lot of research into the subject but it's all so very confusing.
Is foreign sponsorship taxable? If so I understand there to be various special circumstances, since 90% of my income is form the US, to prevent double taxation.
I've been led to believe that the fact it's sponsorship has various special clauses also.

I also provide no physical goods and don't consider what I do to be providing a service. Simply being sponsored and selling licensing on my intellectual property and digital media. How do I declare what sort of business I am running here?
All the advice I've found has very much been geared towards running a UK business receiving UK payments for physical goods or services.

Thanks in advance for any advice you can provide. I find myself in a very confusing situation.

 

[Eagle]

Is foreign sponsorship taxable?

It's income, so yes.

I also provide no physical goods and don't consider what I do to be providing a service. Simply being sponsored and selling licensing on my intellectual property and digital media. How do I declare what sort of business I am running here?

You'll need to phone HMRC and explain. They can be quite understanding if you volunteer your situation to them. Quite wrathful if you don't.

 

[David Richards]

I've been doing this for 3 years and I haven't registered for tax or filed a return in that time.

Then you need to act quickly. You're already liable for penalties and interest. The sooner you act, the less you'll have to pay.

Is foreign sponsorship taxable?

If it's income, then it's taxable.

If so I understand there to be various special circumstances, since 90% of my income is form the US, to prevent double taxation.

This is where your accountant will earn his or her fee. By ensuring that your affairs are dealt with in the most tax-efficient way; e.g. any tax you've paid overseas might be offset against any UK tax due.

I also provide no physical goods and don't consider what I do to be providing a service.

If you're not providing physical goods, then it's a service.