UK: Government could force tech firms to report sellers' income to HMRC.

As published on computing.co.uk, Monday 16 August, 2021.

The new rules, intended tackle tax evasion, will affect as many as 5 million firms in the UK
The UK government is seeking to implement new rules from January 2023 that will force tech companies to report information about the income of sellers on their platform to HMRC.

The plan follows an OECD report last year, which detailed how online marketplaces such as Amazon and Uber should cooperate with international tax authorities. The report recommended these platforms should provide information on the individuals or sellers that use their apps or websites to run a business, to avoid tax evasion.

The UK government's plan was first revealed in this year's Budget, and subsequently confirmed in a consultation published on 30th July.

The UK is one of the first countries to opt in to adopting the OECD recommendations. The government says its objectives include tackling tax evasion and to help the sellers get their taxes right.

HMRC says the new rules could be implemented as early as January 2023. They will affect between 2 and 5 million firms in the UK, although the government says, 'the impact for each seller is expected to be small'.

When the new rules come into effect, online platforms will have to share sellers' names, contact details, tax identification numbers and total sales made through the app/site to HMRC.

Writing in the preface to the consultation, Treasury Minister Jessye Norman said the new rules would help people to pay taxes correctly, while also helping HMRC to detect and address tax breaches. They will also help improve international cooperation on the exchange of information for tax purposes, he added.

Platforms that will be affected include food delivery services, taxi services, freelance jobs and accommodation rentals, as well as those that 'facilitate the sale of goods and transport rental,' the consultation said.

Small startup platforms may be exempt from the new rules. Occasional sellers who make fewer than 30 sales a year, of 'a total of not more than €2,000', are also likely to be exempt.

In addition to sharing seller income, digital platforms will also be required to record sellers' identifying information such as their location, as well as the location of rental accommodation.

The government says this will enable HMRC to share the data with other tax authorities, if the seller lives abroad.

Digital platforms must also provide the seller with a copy of the details sent to the tax authorities, to help sellers 'declare proper income and facilitate compliance with tax obligations'.

The consultation will close on 22nd October 2021.