Joshua Leigh & Co

Digital platforms to report sellers’ income from as early as 2023

Digital marketplaces will be required to report the income of sellers from as early as 2023, it has been announced.

The consultation document, found here, outlines how the Organisation for Economic Co-operation and Development (OECD) Model Reporting Rules for Digital Platforms will be adopted in the UK.

According to the report, the new rules will require digital platforms – such as Amazon, Uber, and Deliveroo – to report details of the income of sellers on their platform to the British tax authority, HM Revenue & Customs (HMRC), as well as the seller to help them declare the correct income for tax purposes.

The data will be provided on 31 January each year, covering the previous 12 months of revenue.

The new rules will apply to a wide range of digital marketplaces, including those that facilitate the provision of services – such as taxi and private hire services, food delivery services, freelance work and letting of accommodation.

The small businesses and self-employed workers who provide such services – around two to five million workers – will also be affected.

However, platforms that facilitate less than £1 million of services may be exempt from the rules, removing the “administrative burden for new entrants into the digital marketplace”.

HMRC says the reporting rules for digital platforms will come into force from January 2023 “at the earliest”.

The consultation document reads: “The digital economy empowers individuals and businesses to connect with consumers both at home and abroad. It thereby offers huge benefits and opportunities for UK businesses, workers, and consumers, which is why the government is committed to encouraging the growth of the UK’s digital economy.

“However, the growth of the digital economy also creates challenges of compliance and tax collection for HMRC and other tax authorities.

“To address some of these challenges the OECD has developed model rules for digital platforms to report the income of individuals or companies selling goods or providing services via their platform (“sellers”) to the tax authority where the platform is resident, incorporated or managed.”

To access the consultation document, please click here.

For help and advice with related matters, please get in touch with our team today.

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