New reporting requirements for digital platform operators from 1 January 2024

Certain UK-based digital platform operators will, from 1 January 2024, be required to collect, verify, and report to HMRC, details about sellers operating on their platforms under regulations that were passed in July 2023.

The new UK regulations implement the OECD Model Reporting Rules for Digital Platforms, which were drawn up with the aim of counteracting the growing tax gap created by the digitalised economy. The OECD rules have already been implemented in the European Union, where they are known as “DAC7”.

The first reports under the UK regulations will cover the 2024 calendar year and will be due to be submitted to HMRC by 31 January 2025. If they have not done so already, platform operators should now begin to assess whether they are within the scope of the rules and, if so, to ensure that they have adequate processes in place to collect and verify the necessary information.

Key points to note in respect of the new reporting requirements for digital platform operators

• A platform operator is an entity that contracts with “sellers” and makes available to them software which will allow them to connect with “users” with a view to carrying out certain activities. The new reporting requirements apply in circumstances where those activities entail the rental of property, the provision of personal services that involve time-based work, the sale of goods, or the provision of transport services.
• The UK rules will apply to relevant platform operators that are UK resident for tax purposes, that are incorporated in the UK, or that have their place of management in the UK (although entities established elsewhere may be subject to similar obligations in other jurisdictions).
• Where the rules apply, platform operators will be required to give notice to HMRC that they are subject to the reporting obligations no later than 31 January following the end of the first calendar year in which this is the case.
• Platform operators will need to collect information about sellers – including full names, addresses, taxpayer identification numbers, and dates of birth or business registration numbers – along with details of the transactions in which they were involved. The platform operators will need to verify the collected information.
• The relevant information will need to be electronically submitted each year to HMRC by 31 January following the end of the calendar year to which the information relates. Information in respect of each of the sellers will also need to be provided to those sellers within the same timeframe.
• Penalties can be charged for non-compliance. There are a raft of different penalties, with a failure to submit a report being subject to an initial penalty of up to £5,000 and subsequently daily penalties of up to £600.

The above information is intended to provide a brief overview of the UK’s implementation of the OECD Model Reporting Rules for Digital Platforms.