New anti-tax evasion rules require e-commerce platforms to report on seller income

Tue 2 Jan 2024
Posted by: Benjamin Roche
Trade News

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New rules come into force today in the UK that will require e-commerce platforms to pass information to HMRC on the income of sellers who use them.

OECD suggestions

The new measures will see HMRC gather the information on sellers of goods and services overseas before sharing it with the relevant foreign authorities in an international attempt to limit tax evasion. The regulations apply from 1 January 2024, while reporting will be required from January 2025.

They mark an implementation of the Organisation for Economic Co-operation and Development's (OECD) 'Model Rules for Reporting by Platform Operators' with respect to Sellers in the Sharing and Gig Economy (MRDP) which the group has developed in talks with the UK and other nations over the last few years.

Sellers affected

The government has said today that the changes will affect “digital platforms in the UK that facilitate the provision of services or the sale of goods by UK or other taxpayers”.

UK taxpayers who sell goods or services on those platforms will also be affected, and the government notes that the platforms include those that provide services such as taxi hire and food delivery.

It notes that the new rules are not expected to have an impact on individuals who use digital platforms to purchase goods or services.

Improve international cooperation’

It adds:

“The regulations will support the government’s work to help taxpayers get their tax right first time, and to bear down on tax evasion.

“This will improve international cooperation and mean that tax authorities have similar visibility of income for sellers on digital platforms as they would have with traditional businesses."

The adoption of a “consistent, standardised international approach” to information sharing will avoid the complications of a “patchwork” of different reporting requirements by authorities across different regions, the government also suggests. It hopes the rules will simplify compliance for sellers, while also making it easier to identify those who evade tax.

Powers were implemented in the Finance (No. 2) Act 2023 last year to enable the introduction of the new rules through secondary legislation. It came after the announcement in 2021’s Spring Budget that the government intended to adopt the MRDP, as well as a subsequent consultation. The government took technical feedback following the publication of draft regulations in 2022.

The IOE&IT perspective

Susan Roe, Institute of Export and International Trade (IOE&IT) international trade specialist and secretariat lead for the IOE&IT-convened E-Commerce Trade Commission, says the move should provide more international consistency:

“From a UK sellers’ perspective – which includes individuals and businesses who are selling products or services through online platforms such as Facebook, Vinted and Airbnb, for instance – the overall intention of this rule is to ensure they are declaring their taxable income.

“Digital platforms will help with this by collecting information on UK-based sellers, including their name, address, date of birth and national insurance (NI) number, along with earnings and fees paid on the platforms.

“The rule not only provides a more consistent approach for OECD member countries, but with the UK implementation from January 2024, it will also enable HMRC to quickly and efficiently exchange information with other tax authorities to access data from platforms based outside the UK.”