The UK government will be applying the expanded version of the OECD reporting rules as advised by HMRC for digital platforms. HMRC is planning to implement the Organization for Economic Co-operation and Development (OECD) Model Reporting Rules for Digital Platforms as per the new consultation. It says that, probably from January 2023, all the incomes of sellers of goods, as well as personal services, must be reported by the digital websites and apps based in the UK.
They are planning to adopt the OECD rules in the Budget 2021 where the sellers have to report the income arising in the previous calendar year by using their platform to HMRC.
The OECD rule will include the sale of goods and rental of transport in an extension to the rules in June 2021. As per the estimation by HMRC, the new rules will affect almost 2m-5m businesses though they expect that the impact on the individual sellers will be small.
The consultation states are planning to implement the new rule until January 2023 at the earliest and they also request opinions on the practical implementation of the rules, as well as on areas where the government has flexibility in adopting the rules and its proposed approach to penalties for non-compliance.
Impact on the digital platforms
Under the OECD rules, the income of individuals or companies selling goods or providing services via digital platform providers has to be reported to the tax authority where the platform is ‘incorporated or managed’.
The platforms also need to collect and verify the information that identifies the seller and their location, as well as the location of rental accommodation alongside recording and reporting the sellers’ incomes. This will help HMRC to identify whether the seller is a resident or where a property is located that can be shared with the tax authorities.
To help the seller declare the correct amounts for tax purposes so the platforms are required to provide a copy of the information to the seller each year. As per the rules the data needs to be provided on 31 January each year.
