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Starting in January 2024, online platforms will be required to report information about the income of sellers on their platforms directly to HMRC for tax purposes. This is a significant change that will affect a wide range of businesses, including e-commerce platforms, social media platforms, and ride-hailing apps.

The new reporting requirements are based on the OECD's Model Mandatory Disclosure Rules for Financial Transactions (MDR), which aim to improve transparency and combat tax evasion. The UK government has implemented these rules into domestic law through the Digital Reporting Requirements for Financial Transactions Regulations 2022.

What information will online platforms need to report?

Online platforms will need to report the following information about sellers on their platforms:

The seller's name, address, and tax identification number
The gross proceeds from the sale of goods or services on the platform
The seller's fees
The net proceeds from the sale of goods or services on the platform
Which online platforms are affected?

The new reporting requirements apply to online platforms that meet certain criteria, including:

Having a UK tax presence
Facilitating the sale of goods or services through an electronic interface
Having total relevant income of £1 million or more in the previous financial year
When will the new reporting requirements start?

The new reporting requirements will start in January 2024. Online platforms will be required to report information about the income of sellers on their platforms for the 2023-24 tax year onwards.

What are the penalties for non-compliance?

Online platforms that fail to comply with the new reporting requirements will be subject to penalties. The maximum penalty for non-compliance is £100,000 per quarter.

What impact will the new reporting requirements have?

The new reporting requirements are expected to have a significant impact on online platforms. Platforms will need to invest in new systems and processes to comply with the requirements. They may also need to pass on the cost of compliance to sellers.

The new reporting requirements are also expected to have a significant impact on HMRC. HMRC will receive a large amount of new data about the income of sellers on online platforms. This data will help HMRC to identify and tackle tax evasion.

The new reporting requirements are a significant change that will affect a wide range of businesses. Online platforms will need to take steps to comply with the requirements, and HMRC will need to prepare for the influx of new data.

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