Under rules set to come into effect in 2023, digital platforms on which people buy and sell products or services will become responsible for reporting earnings information regarding the freelancers that utilise them.
The new rules, which are drawn from the OECD’s Model Reporting Rules for Digital Platforms, are intended to help the Treasury more effectively monitor the tax compliance of people working via freelance or ‘gig economy’ platforms.
When the new rules come into force in January 2023, platforms like Fiverr, Deliveroo and Airbnb (to name just a few) will be responsible for collecting and reporting certain information regarding sellers that use them to HMRC.
The new responsibilities are: that platforms must collect certain information regarding sellers, such as who they are, where they are based and how much they earn on the platform on an annual basis; that platforms must report this information, along with the seller’s income, to HMRC by 31 January each year; and that platforms must also pass this information on to the seller.
This information can then be used by self-employed sellers to help them fill in their annual self-assessment tax returns. While the responsibility for paying tax incurred while trading via a digital platform will remain with the seller, the government is reportedly poised to announce penalties for platforms that don’t comply with the rules and fail to report correct information to HMRC by the 31 January deadline.
In the Spring Budget 2021, the government announced that it would open a consultation as it seeks to find the best way to implement these rules. Through the consultation, which is now open, the government will gather feedback from affected parties to help it introduce the new rules effectively.
Author: Steven English