21 January 2025
This January many digital platforms will have to register and file their first digital platform return by the end of the month. With this additional data, HMRC is likely to turn its attention to the sellers on these platforms to ensure they are paying the correct amount of tax and VAT on earnings.
What are the digital platform reporting requirements?
In July 2023, HMRC released a policy paper explaining that it would introduce OECD rules requiring digital platforms facilitating certain gig economy activities to report information regarding the sellers on their platform. The first reporting period started on 1 January 2024, but the deadline for registration and submitting the first return (covering the 12 months ended 31 December 2024) is the end of this month. In December, HMRC opened up the registration process but many businesses are still trying to establish their obligations.
A little detail on the changes, and the penalties
The OECD has for some time recognised that the increasing popularity of the gig economy made it very hard for governments to regulate and tax all the market participants benefiting from this technology. In response, it suggested that the platforms responsible for facilitating the trade should be responsible for reporting their sellers’ activity. As a consequence, first the EU, then the UK (along with Canada and New Zealand, amongst others) has introduced its own reporting regime based on the OECD model rules.
In the UK this means that any platform facilitating the trade in goods, short-term letting of land or personal services (eg taxi services) must report their sellers’ information by the end of this month. While the aim was principally to ensure private individuals earning money from these sites would be reported, the requirements will capture any seller that is not part of the government or a listed entity. Thus, the extent of these rules is far more wide-reaching than one might expect.
Our experience suggests that many operators are only now turning their attention to these new rules and HMRC’s limited guidance means that there are quite a few unanswered questions. As matters stand, there are a variety of penalties for ignoring these rules including up to £1,000 for failing to notify HMRC of your obligation and an initial penalty of up to £5,000 for failing to report sellers’ activity before the deadline.
What does this mean?
Any platform bringing together suppliers and customers should carefully consider these new reporting requirements. There are no new tax or VAT rules for the sellers deriving income from these platforms, but they should be aware that HMRC will now have far more information on their activity on these sites and if there’s any doubt take professional advice as soon as possible.

