HMRC have published guidance outlining penalties for UK-based digital platform operators for not meeting their reporting and filing obligations. Penalties of up to £5,000 can be charged for each obligation not met.
Since 1 January 2024, Digital platforms must collect and verify information about sellers who use their platform and report it to HMRC annually, along with each seller's income details.
An app or website is a digital platform for these purposes if:
- It connects sellers and buyers to supply goods or services directly via the platform or indirectly through third-party sellers of goods and services.
- The amount paid to sellers for the goods and services can easily be calculated or can be found out from a third party.
Digital platforms include websites and apps such as Etsy, eBay, Airbnb and Uber.
Penalties for failure to meet obligations
HMRC may charge penalties if a digital platform has failed to meet its reporting obligations. A penalty up to £5,000 may be issued if the digital platform operator does not:
- File a report to HMRC by 31 January following the end of each calendar year.
- Provide information to reportable sellers by 31 January following the end of each calendar year.
- Provide information that has been requested in writing by HMRC by the deadline given.
HMRC may charge a separate penalty of up to £5,000 for each unmet obligation.
- More than one penalty can be charged in each relevant reporting period if there is more than one obligation not met.
- For example, failing to file a report by the deadline and not providing information reportable to sellers could mean HMRC impose a penalty of up to £10,000.
- If the digital platform operator does not meet obligations within 30 days of the first penalty being charged, HMRC may impose further daily penalties of up to £600 until the operator is compliant.
- Penalties are not charged where the digital platform operator has a Reasonable excuse.
Where inaccuracies or incomplete reporting have occurred, a penalty of up to £100 for each seller may be imposed where any of the following apply:
- The inaccuracy or incompleteness is deliberate.
- Reasonable care was not taken, which caused inaccuracy or incompleteness.
- The digital platform operator discovered an inaccuracy or incompleteness but no reasonable steps were taken to inform HMRC.
HMRC will consider various factors when calculating a penalty for inaccuracy or incompleteness. These factors include things like how co-operative the digital platform operator is and how significant the inaccuracies are.
Penalties can also be charged where:
- Records are not kept (up to £5,000).
- There is a failure to notify HMRC that the platform is a reporting or excluded operator (up to £1,000).
- There is a failure to follow due diligence procedures in the regulations (up to £100 per seller).
HMRC will notify digital platform operators in writing where a penalty has been imposed. Penalties can be appealed.
HMRC have advised that when a digital platform operator deliberately provides false information, a criminal investigation may occur, potentially resulting in prosecution.
Useful guides on this topic
Digital Platform Reporting
What is digital platform reporting? What is a digital platform? What are the digital platform reporting obligations? Who is excluded from digital platform reporting?
Grounds for Appeal: Reasonable Excuse
What is considered to be a 'reasonable excuse' when a taxpayer appeals against a tax compliance failure?
How to appeal a tax penalty (subscriber version)
What are the steps in making an appeal? What should an appeal cover? What does recent case law say on this topic?
External link
Penalties for Digital Platform Operators - CC/FS98