Last week, we reported on the new rules set to come into effect from January 2023 that will make digital marketplaces, such as Uber, Deliveroo and Fiverr, responsible for reporting earnings information regarding the sellers that trade on their platforms to HMRC.
The government is currently undertaking a consultation with groups likely to be affected by the new rules, such as freelancers and those contracting for “gig economy” companies, to see how it can most efficiently implement the rules.
The primary concern for freelancers regarding the new rules is tax obligations. If a freelancer trades through digital marketplaces that are within the scope of the rules, then their earnings on those platforms will be reported to HMRC.
This makes tax compliance even more vital for these freelancers, as discrepancies between what they and the platform report to HMRC would give the Treasury reason to investigate the individual freelancer.
A potential upside for freelancers is the fact that the new rules also require the digital platforms to share earnings information with sellers, as well as with HMRC. Having this information provided and readily available is likely to make it easier to accurately file a Self-Assessment Tax Return.
Another possible implication is a broader one, and that’s the suggestion that the rules imply HMRC will be scrutinising earnings and tax compliance in the self-employed, freelance and gig economy industries even more closely than before.
While the new rules may indicate increased scrutiny from the Treasury, the bulk of self-employed workers trading through digital marketplaces should have nothing to worry about, providing they are rigorous in their tax compliance. If anything, the new rules will make filing tax returns even easier and help to eliminate the kind of errors that may attract HMRC attention.
Author: Steven English