The CIOT has responded to HMRC’s consultation Reporting rules for digital platforms on the implementation of the OECD model reporting rules. The rules will require digital platforms to report details of the income of sellers on their platform to the tax authority where the platform is resident, incorporated or managed, the tax authority where the seller is resident, and also to sellers themselves.
Key comments include:
The CIOT agrees with the proposals on excluding certain platform operators (meaning those operators will not be required to report and will therefore not be subject to enforcement procedures) and making sure they can indicate their exempt status as part of the initial registration process.
Definitions of ‘personal services’ and ‘platforms’ are too broad, potentially leading to difficulties in determining who is caught by the rules and whether a business which simply sells goods and services direct to customers through its own website is in scope.
The proposed Government verification service (GVS) must be easy to use, quick and efficient. Where sellers are not already registered for self-assessment income tax, a GVS could enable them to register (and also for making tax digital).
Early reports of income by platforms to sellers (before the 31 January deadline) sound helpful, but do not deal with the underlying problem of the UK having a 5 April tax year end.
HMRC might consider specifying the title, format and content for reports of data provided by platforms to sellers. The data would need to be user-friendly, to help sellers identify the information required to comply with their tax obligations.
Platform operators will only report on turnover. They will not have oversight of costs and so will not be able to provide information on taxable profit. Clear guidance for sellers on this point will be particularly important.
The CIOT would like to see more detail on the proposed approach to penalties. Penalties need to be sufficiently high to encourage platforms to comply but also take into account the size of the business, so that the impact of the penalty is proportionate, given that many small start-ups may find themselves within the scope of the regime.
The CIOT has responded to HMRC’s consultation Reporting rules for digital platforms on the implementation of the OECD model reporting rules. The rules will require digital platforms to report details of the income of sellers on their platform to the tax authority where the platform is resident, incorporated or managed, the tax authority where the seller is resident, and also to sellers themselves.
Key comments include:
The CIOT agrees with the proposals on excluding certain platform operators (meaning those operators will not be required to report and will therefore not be subject to enforcement procedures) and making sure they can indicate their exempt status as part of the initial registration process.
Definitions of ‘personal services’ and ‘platforms’ are too broad, potentially leading to difficulties in determining who is caught by the rules and whether a business which simply sells goods and services direct to customers through its own website is in scope.
The proposed Government verification service (GVS) must be easy to use, quick and efficient. Where sellers are not already registered for self-assessment income tax, a GVS could enable them to register (and also for making tax digital).
Early reports of income by platforms to sellers (before the 31 January deadline) sound helpful, but do not deal with the underlying problem of the UK having a 5 April tax year end.
HMRC might consider specifying the title, format and content for reports of data provided by platforms to sellers. The data would need to be user-friendly, to help sellers identify the information required to comply with their tax obligations.
Platform operators will only report on turnover. They will not have oversight of costs and so will not be able to provide information on taxable profit. Clear guidance for sellers on this point will be particularly important.
The CIOT would like to see more detail on the proposed approach to penalties. Penalties need to be sufficiently high to encourage platforms to comply but also take into account the size of the business, so that the impact of the penalty is proportionate, given that many small start-ups may find themselves within the scope of the regime.
