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OTS update on the ‘gig’ economy

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The OTS has published a new paper as an update to its December 2016 focus paper on tax issues affecting the ‘gig’ economy. The latest paper contains more on VAT considerations, particularly the cross-border issues around online platforms.

Returning to the Uber case, involving the taxi app company which does not charge VAT because its services are provided by a ‘mosaic of small business’ not registered for VAT, the OTS suggests this could be seen as gaining a competitive advantage by charging 20% less on its fares than others. The press has reported plans of a challenge against Uber on this point in the High Court.

Similarly, private home owners using Airbnb, the accommodation platform, would not charge VAT, in contrast to hotel businesses.

There is a growing awareness of the potential for non-compliance among online platforms, with sellers allegedly able to conceal their liability to VAT when trading on sites such as Amazon and eBay. The OTS points to recent action by HMRC to legislate against online marketplaces, requiring the appointment of UK tax representatives and the fulfillment house due diligence scheme.

The paper contains no recommendations, but is intended to raise issues, on which the OTS welcomes comments.