From January 1, 2024, digital platforms operating in the UK are required to comply with new reporting rules set out by the Organisation for Economic Co-operation and Development (OECD). These rules mandate that digital platforms collect and report specific information about sellers to HM Revenue & Customs (HMRC). This change aims to enhance tax compliance and facilitate international tax cooperation.
WHAT QUALIFIES AS A DIGITAL PLATFORM
A platform is classified as a digital platform if it:
- Connects sellers to customers for the provision of goods or services.
- Can determine or easily ascertain the amount paid to sellers.
Examples of digital platforms include those offering services such as:
- Taxi and private hire services
- Food delivery
- Freelance work
- Short-term accommodation rentals
However, the rules do not apply if you only:
- Sell on a platform
- Manage a platform as a sole trader
- Sell goods or services directly through your own website or app
WHO NEEDS TO REPORT
If you operate a digital platform, you must report to HMRC if:
- You are based in the UK
- You are governed by UK laws
- You have a place of management in the UK
Exceptions are made for operators whose entire business model:
- Does not allow sellers to profit from payments received
- Has no reportable sellers
REPORTING REQUIREMENTS
Sellers to Report
You must report information about:
- Sellers residing in the UK or any other country adhering to these rules
- Sellers actively supplying or receiving payment for goods or services on the platform
Exempt from reporting are:
- Entity sellers with more than 2,000 property rentals per year
- Government entity sellers
- Entities whose shares are regularly traded on a stock exchange
- Sellers with fewer than 30 sales and less than €2,000 (approximately £1,700) in annual sales
INFORMATION TO COLLECT
You must collect and verify the following information:
For Individual Sellers:
- Full name
- Main address
- Date of birth
- Tax identification number (e.g., National Insurance number for UK residents)
- The country that issued the tax identification number
For Entity Sellers:
- Legal business name
- Main business address
- Tax identification number (company registration number for UK entities)
- The country that issued the tax identification number
For UK partnerships, the Unique Taxpayer Reference (UTR) is required.
DUE DILIGENCE
Due diligence must be performed to verify the collected information, even if a third-party service is used.
Extended Time Limits:
When you first become a reporting platform operator, you have until the end of the second year to complete due diligence for sellers registered before reporting obligations began.
REPORTING DEADLINES
Reports must be submitted to HMRC by January 31 for the previous reporting year. For instance, information for the year January 1, 2024, to December 31, 2024, must be reported by January 31, 2025. Additionally, sellers must receive a copy of the reported information by this deadline to assist with their tax returns.
Submission Process
Currently, the reporting service is not available for registration. Updates will be provided once it is live. Registered operators will need to upload XML files to the service.
PENALTIES
Failure to comply with the reporting rules may result in:
- A penalty of up to £1,000 for not notifying HMRC as a reporting or excluded operator
- An initial penalty of up to £5,000, plus a continuing penalty of up to £600 per day, for not reporting by the January 31 deadline
- A penalty of up to £100 for each inaccurate, incomplete, or unverified seller’s record
RECOMMENDED ACTIONS AGAINST NON-COOPERATIVE SELLERS
If sellers do not cooperate, consider:
- Limiting their access to the platform until information is provided
- Preventing them from registering on your platform
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