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| 6 minutes read

Model Reporting Rules for Online Platforms: draft UK regulations

On 18 October 2022, the UK Government published draft regulations to implement the OECD’s “model rules for reporting by platform operators with respect to sellers in the sharing and gig economy” (Model Rules). The UK regulations impose due diligence and reporting requirements on platforms facilitating the provision of services and sale of goods by sellers resident in the UK or a “partner jurisdiction” (expected to include the EU under DAC 7).

The purpose of both the Model Rules and the UK regulations is to target perceived tax non-compliance by individuals and other persons who provide services or sell goods via online platforms (Sellers). They work by requiring the platforms to provide tax authorities with sufficient information to allow those authorities to run compliance checks on Sellers. This information would potentially then be exchanged with other tax authorities through automatic exchange of information processes.

Although the regulations are open for technical feedback until 13 December 2022, they appear to represent settled policy in this area and will take effect from 1 January 2024 – with the first reports under the regulations due by 31 January 2025.

The regulations rely heavily on the Model Rules, cross-referring to them throughout. They are also very similar to equivalent “DAC 7” rules being introduced in the EU, which come into effect from 1 January 2023.

Who is in scope?


A platform is very broadly defined – in essence it is any online service that permits individuals or companies to provide “relevant services” or sell goods to consumers for consideration. A “relevant service” is the rental of immoveable property or means of transport, or the provision of a service involving time or task-based work at the request of a user (excluding by employees of the platform). Platforms which solely process payments, are search engines or list or advertise services are excluded.

The regulations apply to “reporting platform operators” i.e. legal entities that contract with Sellers using their platform, and which are resident, incorporated or have their place of management in the UK. Excluded from this concept are platform operators whose business model prevents Sellers from making a profit, or that do not have any Sellers earning consideration. Online marketplaces for goods, accommodation, ride-hailing apps, car-sharing platforms and freelancing sites will all be in-scope of the regulations if they have in-scope Sellers.

Notably, there is no de minimis nor any exemption for start-ups and the UK has not included the de minimis of EUR 1 million that applies under the Model Rules. Even excluded platform operators are required to notify HMRC that they are relying on the exclusion.


Reporting platform operators are only required to provide data on reportable Sellers – i.e. users registered with the platform who are resident in the UK or a partner jurisdiction and who provide relevant services or sell goods on the platform for consideration.

Occasional sellers are excluded if they sell goods or perform relevant services fewer than 30 times in a calendar year and receive less than £2,000 in total via the platform.

There are also exclusions for governmental entities, listed sellers and sellers who rented immoveable property more than 2,000 times on the platform in a calendar year.

What do platforms have to do?

The regulations impose both due diligence and reporting obligations on platforms.

Due diligence

The regulations require platforms to collect information about Sellers and their property listings (if applicable), to verify the collected information and, for each calendar year, identify which Sellers are reportable sellers, with potential penalties on the platform of up to £100 per Seller for non-compliance.

The due diligence information required to be collected is basic ‘KYC’ information – name, address, tax identification number (such as national insurance number or VAT registration number) and date of birth or company number, as well as tax residence (although that can be assumed based on the address provided). 

In the consultation, many respondents were concerned about the additional burden imposed on platforms by the verification obligation. The Government decided not to introduce a verification service for platforms to rely on, so platforms must decide themselves what procedures are sufficient and feasible. For example, this may include uploading a photo of a driving licence or passport and checking it against a photo of the Seller.


On top of the regular KYC due diligence information, a platform must also report on the bank or payment account into which consideration is paid, the total consideration paid for each year, any fees, commissions or taxes withheld, the seller’s jurisdiction of residence and, for the rental of immoveable property, details about each property listing and the number of days each property was rented. To the extent this information is not already being collected by the platform, thought will need to be given to updating IT systems. Given the short turnaround times for reporting (platforms must report the in-scope data by 31 January following the end of the previous calendar year or “reportable period”),  platforms may need to consider automating their reporting procedures.

The report will have to be made using an electronic report system and in a format specified by HMRC – likely to be an XML schema, which can be resource intensive to set up, particularly for smaller platforms.

Multiple reports

The platform does not have to report on a Seller if the reporting platform operator “reasonably believes” that another platform operator is required to and will report the information either to HMRC or to a tax authority in a “partner jurisdiction”. This is not allowing a platform to rely on the report of a rival platform; it is more about preventing platforms from reporting in multiple jurisdictions.

The EU rules allow a platform to elect to report in a single Member State and the UK is intending to enter into an equivalent agreement with the EU to avoid the need for double or multiple reporting as between the UK and EU. Platforms will be keen for the UK to reach agreement with the EU as soon as possible, and ideally before the regulations take effect in the UK. There is currently no indication of the Model Rules being adopted in the US.

What does this mean for platforms in practice?

Effect on platforms

The regulations impose a significant compliance burden on platforms. Even if a multinational platform is already providing reports outside the UK, it will still have to collect and verify additional information on Sellers. Platforms need to consider whether they are in scope, and ensure that they are investing in and preparing adequate internal procedures now. They will also need to keep a close eye on EU Member States’ domestic implementation of these rules for any practical deviations.

The rules are unforgiving on start-ups and small platforms who may be unaware of the regulations and may inadvertently fall foul of their obligations, exposing them to penalties.

The regulations do bring benefits for platforms, however. First, it is in platforms’ interests for the relatively simple Model Rules to be implemented consistently across business models and jurisdictions to create a level playing field – the inclusion of the sale of goods and the consistency between the Model Rules, the UK regulations and the EU rules is therefore welcome. Second, the due diligence and reporting obligations may be preferable for platforms compared to the possible alternative, the imposition of withholding tax obligations, or even secondary tax liability, for their Sellers’ taxes.

Next steps and dealing with HMRC

Platforms may want to consider advance messaging to their users who are likely to be Sellers, to make them aware that their information will be collected and reported in this way. Many platforms also provide educational materials on tax compliance obligations to their users, and the Government has promised to provide guidance for Sellers to explain the regulations.

HMRC can impose penalties for non-compliance, including a penalty of up to £100 per reportable Seller for a carelessly or deliberately inaccurate or incomplete report – and given the number of Sellers active in the UK alone, these penalties could quickly become material. Although there is a “reasonable excuse” defence for some penalties, insufficient resources and reliance on others (for example by contracting out some or all of these obligations) are specifically excluded from being a “reasonable excuse”.

One of the main criticisms in the consultation was that the Model Rules used vague terminology, so one of the hopes was that the UK rules would provide further clarity on their interpretation and application. The draft regulations unfortunately do not provide that clarity and in many places simply cross-refer to the Model Rules with limited modifications. The draft regulations appear to be an opportunity missed in terms of providing much needed certainty in this area. The UK has promised “detailed clear guidance” on the application of the regulations, but that has not yet been published.

The proposed regulations are part of a wider international trend forcing platforms to support their users’ tax compliance. As platforms continue to gain market traction, the pressure for these types of rules will intensify. Platforms will not be able to turn the tide but should continue to push for clarity, consistency and proportionality – together with enough time to get their houses in order. Although the UK now has the regulatory freedom to diverge from the EU, the proposed regulations are a pragmatic example of the UK taking an approach which is well aligned with both the OECD and the EU, to remain competitive as a market for innovative businesses.


e-commerce, platforms