On 30 July 2021 the UK government launched a consultation on how to implement of the OECD Model Reporting Rules for Digital Platforms, under which digital platforms will be required to report information on the income of sellers on their platform. Information will be given to the HMRC and to the sellers themselves.

The internationally agreed rules will ensure that there are consistent requirements for platforms operating in different countries, however the rules contain certain optional elements, and leave some details of implementation to each country to determine.

The consultation document therefore outlines the detailed rules and is looking for comments from interested parties on the optional elements of the rules and the way in which the UK intends to implement the rules. Comments are also invited on how implementation of the rules will impact business and on practical issues arising.

Under the OECD rules platform operators are required to collect certain information about their sellers, identifying the sellers and their location, and amounts earned on the platform in the period. The platforms need to and report the information by 31 January each year. The information is also given to the sellers so they can complete their tax returns. The tax authorities will then exchange information with other jurisdictions where the sellers are resident or where rental property is located. The tax authorities will use the data to deal with any non-compliance, and there may be penalties for taxpayers that do not comply with the rules.

The OECD rules provide for optional exclusions for platforms where the total payments for services in the previous year are less than EUR 1 million and the operators elect to be treated as excluded from reporting; for platforms that demonstrate that their platform’s business model does not allow sellers to profit from the payments received; and for platforms that show they do not have any reportable sellers. The UK plans to allow these exclusions in the legislation and is asking for comments on this.

The consultation asks for comments on the scope of the rules and for any unexpected scenarios that may need further guidance. Comments are invited on the rules for verifying the data and on whether a government verification service would be useful, this being an electronic process that would allow platform operators to confirm the identity and residence of a seller. Comments are required on how HMRC can work with platform operators to provide information to sellers to help them comply with their tax obligations.

The interested parties that may be interested in submitting comments include the digital platforms facilitating service providers such as taxi services, food delivery, freelance work, residential letting and services facilitating the sale of goods and transport rental. Comments are also sought from organisations representing platforms or businesses in the sharing or gig economy, or the persons providing services using the platforms. Comments are invited by 22 October 2021.

When comments have been received the government will issue a summary of responses to the consultation and consult on draft regulations to implement the rules.