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HMRC Consultation Responses to Reporting Rules for Digital Platforms

HMRC published the summary of responses from the consultation on Reporting Rules for Digital Platforms that happened in October last year.

For those of you who may have missed the consultation and want more information on what is happening, you can find all the details on EFI’s website, alongside our response to the initial consultation here.

In the summary of responses, HMRC have confirmed once again that the start date for due diligence will be 1st January 2024, with first reports being exchanged in 2025. Also, that the optional additions of “sale of goods” and “rental of transport” modules will be included in the final regulations by HMRC. Whilst we are still awaiting detailed regulations and technical guidance, a couple of items discussed through and after the consultation period have been decided.

The most significant item is the exclusion for small platforms paying out less than £1million in income per annum has been removed. This means that all platforms within the definitions of providing personal services, facilitating the sale of goods, the rental of immovable property and modes of transport will now be in scope for these rules.

EFI Opinion – this is happening because of the concern that sellers purposely trying to avoid being reported might start splitting their business across several smaller platforms that are under the reporting thresholds. It makes sense not to allow an easy loophole for those intending to circumvent the rules, and we have seen in practice in the world of financial institutions that wide-scale avoidance just leads to further, harsher regulations being enforced to cover that. If you are a small platform that was previously expecting to be excluded from these regulations, EFI can help you impact assess your situation, and work out cost effective ways to manage these new rules.

As a balance to this, the “occasional seller” rule is being extended out to the provision of services, instead of just covering the sale of goods. This means there will be a threshold in place for earning above a certain amount of income before a seller becomes reportable, which may help smaller platforms previously under the exclusion rules minimise the burden of reporting.

An indication of the penalty regime has also been outlined:

“Platforms will be liable to two types of penalty: a penalty of up to £100 for each inaccurate, incomplete, unverified sellers record, and an initial penalty of up to £5,000 and a continuing penalty of up to £600/day for failing to report by the 31 January deadline.”There will be an appeal process available for reasonable excuses for failing to comply.

EFI Opinion – these might not look like huge numbers, but the way they are structured means they can compound rapidly with any significant event of non-compliance. It is our experience that, whilst there may be some leeway to begin with, a “reasonable excuse” comes with the burden of being able to prove that you have robust procedures in place, and it is no fault of the firm or those working there if reports are late, incomplete, or inaccurate. If you need assistance in setting up and documenting your framework, EFI can help.

Next Steps

The next thing on the agenda for HMRC is to publish the draft regulations, which will go through an eight-week technical consultation period. We expect to see these published in the autumn, and we will of course be engaging directly with HMRC and impacted platforms to help understand these regulations fully and iron out any grey areas. Once the regulations are final, we should also see technical guidance for reporting follow soon after. It is now expected that by the beginning of 2023, all current uncertainties will be known.

We are also following progress of the implementation of similar regimes based on the OECD Model Rules across the EU and other nations and understand that it is important for efficiency and cost effectiveness to align your approach if you are a platform that has bases in more than one adopting country. If you need help understanding how your platform is impacted by these regulations, either in the UK or elsewhere, contact EFI for a preliminary conversation about whether you are in scope and where you should start planning.


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