HMRC have published responses from their 2021 consultation ‘Reporting rules for Digital Platforms’ which considered the implementation of the new Organisation for Economic Co-operation and Development (OECD) Model Reporting Rules for Digital Platforms.

Under the rules, from 1 January 2024, online marketplaces will be required to report details, including the income, of their sellers to the tax authority of the jurisdiction in which the platform is resident. The information will also be sent to the tax authority where the seller is resident, with a copy provided to the seller.

Goods and services covered by the new rules will include accommodation, personal services, transport rental, and tangible goods.

The Original consultation, which closed in October 2021, invited views on the optional elements of the OECD’s rules as well as the UK’s proposed implementation plans.

28 responses were received from platforms, sellers, advisers and representative bodies. Support was generally shown for the proposals in the consultation document, although there were a range of views on specific questions. Key outcomes included:

  • Respondents were generally in favour of minimising the burden on smaller and low-risk platforms but expressed concern that exclusions may be exploited or create competitive disadvantages.
    • The government has concluded that the benefits of a relatively low threshold for excluding smaller platforms do not outweigh the increased burdens and uncertainty this would create. Therefore, a small platform exclusion will not be available.
  • There was support for an extension of the rules to include the sale of goods and transport rental, with an exclusion for sellers that only sell a few goods occasionally.
    • The government will apply the new rules to the sale of goods, as well as services. The ‘occasional’ seller exclusion will be adopted to reduce burdens on platforms.
  • Concern was expressed that the measures would present an additional burden for platforms and result in extra costs, particularly where platforms do not routinely collect some of the required data.
    • The government will only require the minimum amount of data to be collected and verified to enable a seller to be identified and matched.
  • An extension to the reporting deadline in some circumstances, with the ability to use a third-party service provider or another platform to carry out due diligence checks, was supported.
    • These optional additions will be included in the new rules.
  • There were mixed views on reporting methods, with some respondents favouring reporting by an XML upload and others suggesting a manual reporting option should be available.
    • The government will explore whether a manual reporting service can also be provided.
  • The majority of replies supported the proposed penalties, considering them reasonable, proportionate and fair. An initial light-touch approach was suggested.
    • Platforms will be liable to two types of penalty:
      1. A penalty of up to £100 for each inaccurate, incomplete, or unverified seller's record.
      2. An initial penalty of up to £5,000 and a continuing penalty of up to £600 per day for failing to report by the 31 January deadline.
    • Penalties may be reduced for a number of mitigating factors such as the conduct of the platform, the effort made to comply with the rules, the size and scale of the failure or consequences of the error, the degree of co-operation and disclosure, and any remedial action taken by the platform.
    • Penalties will be appealable and will not apply where the platform has a Reasonable excuse for its failure.

HMRC will work with platforms and other stakeholders to produce detailed and clear guidance on definitions and other terms in the new rules.

  • The rules will apply from 1 January 2024.
  • Platforms will be expected to collect information from that date, with the first reports due by 31 January 2025.

Draft regulations to implement the new reporting rules were published in October 2022 for a technical consultation ending on 13 December 2022.

Useful guides on this topic

Online Marketplaces: Selling goods in the UK
When do you have to register for UK VAT? When is UK VAT payable? What amount is VAT payable on? What information do you have to give the marketplace provider? What will it do with that information?

Online Marketplaces: Joint and several liability
Online marketplaces can be held jointly and severally liable for the VAT of an overseas business that is not established in the UK and which sells goods in the UK via their website. What do online marketplaces need to do? 

Common Reporting Standard (CRS)
The Common Reporting Standard (CRS) is a global standard for the automatic exchange of information which has been commissioned by the Organisation for Economic Cooperation and Development (OECD)

Digital Services Tax
The Digital Services Tax (DST) is a temporary mechanism to tax online sales pending a global solution. How does it work? Who is caught?  

AML: Identification and Verification, Individuals
A flow chart and decision matrix to assist with determining the level of risk to assign to new clients (individuals) when completing your client take-on procedures. For use by non-credit/financial institutions and non-FCA-regulated firms.

AML: Identification and Verification, Entities
A guide to Anti-Money Laundering (AML) identification for entities specifically related to UK private companies, Limited Liability Partnerships (LLPs) and partnerships. What checks are required under AML rules for identification and verification? What is covered in identification? How do you verify ID?

External link

Consultation outcome: Reporting rules for digital platforms: summary of responses

Organisation for Economic Co-operation and Development (OECD) Model Reporting Rules for Digital Platforms 

Draft regulations: The Platform Operators (Due Diligence and Reporting Requirements) Regulations

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