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May 24, 2022
2022-0827

UK delays reporting rules for digital platforms

The United Kingdom (UK) Tax Authority, Her Majesty's Revenue and Customs (HMRC) has issued an Update on the UK's reporting rules for digital platforms.

Following a recent consultation on the implementation of the OECD's Model 'Reporting rules for digital platforms', the UK Government has decided that the new rules will start from 1 January 2024. This new date is intended to give platforms and their advisors time to prepare for the implementation of the new rules, with collection of information starting from 1 January 2024 and submission of the first reports due by the end of January 2025.

Further, HMRC has said that it is currently considering the many comments and issues that have been raised by the consultation respondents. HMRC is aiming to publish the Government's response to the consultation, draft regulations giving details of the new rules, and an update on interactions with European Union (EU) rules in this area (referred to as DAC71) this summer. HMRC has said that it will also be engaging with platforms and their advisors before the new rules come into effect.

Background

New rules being introduced in the EU and the UK will require digital platforms to report income earned by sellers using their systems to the respective tax authorities. Enhanced platform reporting is also being introduced in the United States from 2022 (1099-K).

The EU/UK rules will impact:

  • Digital platforms that allow sellers to:
    • Rent immovable property (e.g., short-term accommodation)
    • Provide personal services (e.g., on-demand household/professional services)
    • Rent transport
    • Sell goods
  • Sellers who utilize platforms to provide in-scope activities.

Implications

While the announcement that the UK reporting is delayed may be generally welcomed by platforms as an opportunity to have more time to adapt to new rules, the deferral may not be beneficial to all platforms based in the UK. Platforms that deal with sellers in the EU will now be required to report in an EU country in 2024 rather than reporting in the UK, as a result of extraterritorial provisions in DAC7.

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For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP (United Kingdom), London

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ENDNOTE

1 The EU's Directive on Administrative Cooperation (DAC) in the field of taxation (2011/16/EU)

 

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