22 countries have now signed the multilateral competent authority agreement for the automatic exchange of information under the OECD Model Rules for Reporting by Digital Platforms. The agreement will allow jurisdictions to automatically exchange information collected by operators of digital platforms. Starting from January 1, 2024, UK digital platform (such as Airbnb or Spare Room) will be required to collect and report information about users selling goods or services on their platforms.
Digital platform operators in the UK are obligated to collect and verify specific seller information, which will then be collated and reported to facilitate the identification and matching of sellers with data held by HMRC. This information includes annual revenue, bank account details, name, address, and tax identification number. It will be collected and shared with HMRC, as well as other relevant tax authorities, as necessary. Following the collection of this information, the reporting platform operator is required to submit a report to HMRC no later than 31st January following the end of the reportable period. Additionally, the rules stipulate that the reporting platform must provide the aforementioned information to the seller by 31st January. It is expected that an electronic reporting system, to be determined by HMRC, will be utilized for this purpose.
Reporting platforms are required to inform HMRC of their compliance with the rules by 31 January following the conclusion of the initial reportable period. Moreover, any platform that deems itself an “excluded platform operator” must also notify HMRC accordingly. Excluded platforms are defined as those whose business model does not facilitate seller profitability or lack reportable sellers altogether. Reporting obligations may be exempted if a platform operator reasonably believes that another operator is obliged to report the information to HMRC or another jurisdiction under similar regulations.
Penalties will be levied for late reports, inaccurate or incomplete reports, failure to provide required information, failure to comply with the record keeping requirements, failure not notify a requirement to report and failure to apply due diligence procedures. Penalties are generally in the order of £1000 to £5000 with potential daily penalties of up to £600 per day following issue of a notice of assessment. The penalty for failure to apply the required due diligence procedures is £100 per seller. A platform operator with a reasonable excuse for any failure will not be subject to a penalty.