Talking Tax: Understanding the New UK Reporting Rules for Digital Platforms

The UK’s new Reporting Rules for Digital Platforms came into force on January 1, 2024. These target digital platforms that facilitate transactions between sellers and customers.

Emma McGrory, a Senior Associate in our tax team, explores the new rules, their implications for your business, and the associated tax considerations.

Scope of the rules

The rules apply to digital platform operators, including websites and mobile apps, that facilitate relevant activities. These activities encompass both services and the sale of goods for consideration. Notably, personal services like taxi hire, food delivery, gardening, and catering are captured by these rules, except when provided via an employment contract with the platform operator (or a related entity).

Compliance requirements

A platform operator is considered a ‘reporting platform operator’ if they are UK tax resident, incorporated in the UK, or if they have their place of management in the UK. These operators must collect and verify information about sellers using their platform and report it to HMRC by January 31 following the end of the reporting period. Non-compliance will result in penalties.

Exemptions

Certain platforms and sellers are exempt from these rules. For instance, websites that only list service providers or sell their own goods are not covered. Additionally, platforms where sellers provide services at cost or have no reportable sellers are excluded. Platforms that are exempt need to notify HMRC of this for the exemption to apply to them.

Sellers with low compliance risk, such as those selling goods fewer than 30 times a year and generating less than €2,000 in revenue, are also exempt.

Next Steps for Platforms

Platforms should assess whether the new rules apply to them and ensure they have procedures in place for due diligence, reporting, and notification.

If your business qualifies as a platform under these rules and you need advice, please get in touch.