Have you heard about the new reporting rules for digital platforms? If not, then read on.
From 1 January 2024, there were new reporting requirements for ‘platform operators’ to provide additional information in the UK which will require a submission to be made by 31 January 2025.
The following article reviews which companies fall within the required legislation, what filing requirements will be required, and how to approach the submission.
WHAT IS DIGITAL SERVICES TAX?
This relates to rules that started in the UK from 1 January 2024. They require online marketplaces to report the details and income of those selling goods and services on their platforms.
WHO DO THE RULES IMPACT?
Digital platform operators that reside in the UK, are managed under UK laws, or have a place of management in the UK. Here, a ‘digital platform’ is an app or website that connects sellers to customers to supply goods or services, and the operator knows or can easily find out the amount paid to sellers for goods or services.
WHO IS EXCLUDED?
Generally, the rules do not apply to people who:
- Only sell on a platform;
- Manage a platform as a sole trader; or
- Sell their own goods or services directly through their own website or app.
WHAT ARE THE REPORTING REQUIREMENTS?
Platform operators must collect information from sellers on the platform, verify that information through due diligence, and send an annual report to HMRC.
This information includes, but is not limited to:
- Full name, date of birth and primary address of individuals, or the legal name, primary address and business registration number of an entity or business;
- Tax identification number and where it was issued, plus the VAT identification number where available;
- Number of transactions, total amount paid to them for the reporting year and the details of the bank account it was paid into;
- Any fees, commissions or taxes you have withheld or charged; and
- Details of any property listed.
Sellers making less than 30 sales of goods and receiving less than €2,000 (approx. £1,700) will be exempt. As will entity sellers with more than 2,000 property rentals per year, government entity sellers, and entity sellers whose shares are regularly traded on a stock exchange.
WHAT ARE THE TIMINGS?
A report must be submitted online to HMRC by 31 January for the previous reporting year. So, the first report will cover the year to 31 December 2024, and it will need to be submitted by 31 January 2025.
A reporting person or company will also need to provide sellers with a copy of any reported information by this deadline.
HOW DOES THIS INTERACT WITH GDPR?
Whilst platform operators are required to collect, validate and report certain pieces of personal data, the GDPR regulations will require them to do so without infringing the reportable sellers’ right to the protection of their data. However, this will not prevent or excuse platform operators from collecting and reporting the required data under the legislation.
To stay GDPR compliant, platform operators will need to, amongst other things, inform individual reportable sellers that their information will be collected and reported to the competent authorities, only collect the relevant information that is required for reporting purposes, and only keep it for as long as required under the DST legislation.
HOW CAN COOPER PARRY SUPPORT?
Firstly, our business analytics services can help you find out to what extent your business model or organisation is affected by the rules, and what your reporting requirements are.
Then, we can provide the necessary assistance to ensure compliance with all the relevant filing obligations.
Did you know Cooper Parry has a specialist team dedicated to supporting startups and scale ups? Get in touch.
