New data sharing rules will require tech platforms to provide details of companies supplying a number of specified services – including rented property and taxis – to HMRC in a move designed to cutback on global tax evasion
Platforms affected include Amazon, eBay, Deliveroo, Uber and Airbnb and they will need to supply a range of details on those selling services to HMRC from January 2023.
Details on the move is in a new HMRC consultation called ‘Reporting rules for digital platforms’. The rules are based those already drafted by OECD and they are designed to apply cross-border.
The rules apply to those providing what are described as ‘relevant services’ and include ‘immovable property’, ‘personal services’ and transport rental, if provided for a ‘consideration’.
· Taxis firms
· Food delivery companies
· Labour such as cleaning or gardening services
· Freelance/gig economy services
· Property rentals
What is in the Rules?
They require platforms to ensure they keep the income details of service providers, both inside and outside the UK.
Under the proposals, tech companies would pass on the personal details and income transactions of sellers using their sites or apps to the tax authority where the seller or provider of the service is resident.
Why are the Rules Being Introduced?
Many platforms are headquartered abroad, particularly in the US. There was no obligation to share data on sellers, until the OECD rules were developed. Because HMRC had no knowledge of UK sellers’ activities, it is believed that sales were under reported and some tax would have been unpaid. This is particularly where the sale takes place in a different country to where the service is carried out.
Who will be Impacted by the New Rules?
HMRC said the plans could impact two to five million online providers in the UK, although it claimed, “the impact for each seller is expected to be small.”
Occasional sellers – those who make fewer than 30 sales for a total of up to € 2,000 – a year are likely to be exempt from the rules. Smaller start-up platforms are also likely to be excluded.
Simon Renshaw, director with Company Debt, said: “HMRC will, from 2023, have access to significantly more data and this should prompt those who supply relevant services to take a closer look at their earnings – the current personal allowance, which is tax-free, is £12,570 and earnings above this are taxable.
“Platforms will need to supply the name of the service provider and their location, so they will be easily identifiable. For landlords, the location of the rental property will also be supplied. HMRC will be able to make checks against what is currently being paid in tax and see if it tallies up with what may be new information provided from the platform. If there has been full declaration on self-assessment, then there shouldn’t be an issue. But, for those who have not paid enough, then what has been a loophole will be closing fast. I would suggest taking advice if there is uncertainty and not delaying either.”
The HMRC consultation closes on 22 October 2021.