Platform reporting requirements: the unanswered questions

The UK has recently adopted OECD rules that require online businesses which allow members of the public to sell goods and some services online to report their sellers’ activity. While the tax rules for the sellers (and the operating platforms) remain unchanged, it is anticipated that these rules will ensure compliance with the tax rules by the participants in this sector.

What’s happened?

The EU and UK’s platform reporting rules are both based on the OECD’s Model Reporting Rules for Digital Platforms (MRDP). The focus of the MRDP is to enhance the tax compliance of platform sellers and simultaneously promote international cooperation between tax collectors by creating a “network” in partner jurisdictions where tax collectors share information on seller activity.

The EU and UK platform reporting requirements capture platform operators in the EU and UK. However, the EU rules (DAC7) also capture non-resident platform operators which facilitate a relevant activity by an EU-based seller. As a result, some UK platform operators face the prospect of reporting information under both EU and UK rules.

To combat this, HMRC has made it clear that a platform operator may be exempt from reporting under the UK regime if that information has been reported in a partner jurisdiction under substantially similar rules. As the platform operators are operating in relation to the same platform, it is expected they will already have ties to one another.

Although this appears to be a logical approach to preventing additional compliance for platform operators, HMRC is still to release a list of partner jurisdictions in its ‘Reporting Rules for Digital Platforms Guidance’ manual. Therefore, leaving platform operators in limbo as to whether they need to start collating information on their sellers or if they can rely on the exemption from reporting due to another platform operator reporting on their behalf.

What next?

It’s not clear as to why there is a delay in HMRC publishing a list of the partner jurisdictions, but we wonder if it is due to jurisdictions not yet being able to automatically exchange information. We hope, whatever the reason for the delay, that it is resolved soon and HMRC is able to publish the list of partner jurisdictions to allow businesses to take action in deciding if they have exemption from the UK platform reporting requirements.