UK and International Tax news

HMRC Consultation On Reporting Rules For Digital Platforms

Tuesday 10th August 2021

HMRC is consulting on the implementation of the OECD’s Model Reporting Rules for Digital Platforms, which require digital platforms to report details of the income of sellers on their platforms to the tax authority and also to the sellers.

The government is inviting comments from digital platforms that facilitate the provision of services, including taxi and private hire services, food delivery services, freelance work and letting of accommodation, as well as those that facilitate the sale of goods and transport rental. The government also welcomes views from organisations or bodies that represent platforms or businesses in the sharing or gig economy, and individuals and companies who provide such services using digital platforms.

In this year’s Spring Budget,the government announced that it would consult on the implementation of the OECD model rules published in June 2020. As the model rules have already been consulted on and agreed at an international level, the government intends to follow them closely to ensure a consistent and standardised approach. However, there are areas of the model rules which are optional for jurisdictions, or where jurisdictions have some discretion about how they are implemented, such as the optional extension to the sale of goods and transport rental published in June 2021. This consultation sets out the details of the OECD model rules, points out where there is scope for any change, and then presents the government’s proposed approach to implementing the optional or discretionary elements.

The consultation seeks views on the government’s proposals on those optional or discretionary elements. It also welcomes comments on the impacts for business from the UK’s proposed implementation of the model rules.

The final version of the OECD’s rules was published on 22 June 2021 but too late to be incorporated into this consultation in time for publication on 20 July (Legislation day),  Broadly, the OECD model rules work as follows:

  • platforms must collect certain details about their sellers, including information to accurately identify who the seller is and where they are based, as well as how much they have earned on the platform over an annual period
  • platforms must verify the seller’s information to ensure it is accurate
  • platforms must report the information, including the seller’s income, to the tax authority annually by 31 January
  • platforms must also give that information to the sellers, so that they can use it to help them complete their tax returns
  • tax authorities then exchange information with other tax authorities where the sellers are resident (or rental property is located)
  • the information is used by tax authorities to ensure that sellers are complying with their tax obligations and to tackle non-compliance if they are not
  • tax authorities must enforce the rules and see that platforms are operating them correctly, and there may be penalties for non-compliance

The consultation will run from 30 July 2021 to 22 October 2021. A summary of responses will be published after the consultation closes. The government will also make regulations that will set out the requirements on platforms in the UK rules in detail. A further technical consultation on draft regulations is expected to take place in 2022.

If you would like further information on the consultation, please contact Keith Rushen on 0207 486 2378.

 

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