Changes affecting online sellers and platform hosts

The digital platform reporting rules, effective from 1 January 2024, mark a significant shift in the UK’s approach to tax compliance in the digital economy. These new rules follow the UK’s adoption of the OECD Model Reporting Rules for Digital Platforms, designed to improve transparency and tackle tax evasion.

The aim is to level the playing field between traditional businesses and digital platforms, ensuring fair competition and greater compliance with tax obligations.

Who qualifies as a Digital Platform Operator (DPO)?

A Digital Platform Operator (DPO) is any business that connects sellers with customers to supply goods or services, and has access to information about payments made to those sellers.

A “platform” includes any software, website (or part of one), or app. It doesn’t matter whether the services are provided directly or indirectly—if the platform facilitates the service, it falls within scope. For example, a food delivery platform that purchases services from third-party sellers and delivers food in its own name would be considered a reportable platform.

This covers popular platforms such as eBay, Airbnb and Etsy, along with many smaller businesses operating online. Affected industries include:

• Taxi and private hire
• Food delivery
• Freelance work marketplaces
• Letting of short-term accommodation

DPOs are exempt from reporting if they:

• Have a business model where sellers don’t profit from payments received
• Operate as a sole trader business
• Sell only their own goods on their own platform
• Have no reportable sellers (see below)

All DPOs, whether reportable or exempt, were required to notify HMRC of their status by 31 January 2025.

Who counts as a reportable seller?

Some sellers are not considered reportable, including:

• Companies with more than 2,000 property rentals per year on the platform (e.g. hotels, viewed as low-risk)
• Government entities
• Companies or connected entities whose shares are regularly traded on a stock exchange
• Individuals who made fewer than 30 sales and earned less than €2,000 (around £1,700) in a year

Reporting requirements

DPOs must collect and verify information about sellers on their platforms. They must report seller details and income to HMRC. The first report, covering the calendar year ending 31 December 2024, was due by 31 January 2025.

You only need to report sellers who meet the reportable criteria during the calendar year. If a seller joins your platform but doesn’t meet the threshold until the next year, you don’t need to report them until the following year’s deadline.

Reportable details include:

• Country of residence
• Total income for the reporting year
• Number of transactions
• Any fees, commissions or taxes withheld or charged
• Bank account details (if available)

For individuals, also include:

• Full name
• Home address
• Date of birth
• National Insurance number (if UK-based), or foreign tax ID and country of issue
• Other tax IDs (e.g. VAT numbers), where applicable

For businesses, partnerships, trusts or charities, include:

• Legal business name
• Main business address
• Company registration number (UK), or tax ID and country of issue (non-UK)
• Other tax IDs (e.g. VAT numbers), where applicable
• For UK partnerships, the Unique Taxpayer Reference (UTR)

Platform operators must also provide a copy of the reportable information to each seller by the 31 January deadline.

Penalties for non-compliance

HMRC may impose the following penalties:

• Failure to notify: Up to £1,000 for not informing HMRC of your reporting status
• Late reporting: An initial penalty of up to £5,000, with ongoing penalties of up to £600 per day
• Inaccurate reports: Up to £100 for each incorrect, incomplete, or unverified seller record

There’s limited leniency where a platform has only recently become a DPO. If you had existing sellers before 1 January 2024, you may have up to a year to report on them. However, this grace period doesn’t apply to new sellers who joined after this date—those must be reported in line with the original deadlines.

What must you do?

Platform operators

If you operate a website or app where third-party sellers can make sales, you should already be familiar with this legislation. If your platform was in scope for 2024, you should have notified HMRC and submitted your first report by 31 January 2025.

If you become reportable in 2025, or were previously exempt, make sure you understand the rules ahead of the next deadline on 31 January 2026. If you think the rules applied in 2024 but haven’t yet reported, act quickly and seek professional advice to minimise penalties.

Sellers

If you sell goods or services online—whether you see it as trading, a side hustle, or casual income—you may be a reportable seller. It’s important to know what data platforms will pass to HMRC and other tax authorities.

If your total trading or rental income (before expenses) is under £1,000 in a tax year, you don’t need to report this on a self-assessment return. Still, keep clear records in case HMRC requests more detail.

HMRC has access to platform data, including VAT numbers, and has become more sophisticated in tracking digital sales. It’s vital to stay on top of your tax compliance across all areas of your business.

Since 2021, online marketplaces have also been required to register and account for UK VAT on goods located in the UK at the point of sale—HMRC already holds significant data in this area.

Need help?

If you’re unsure about your reporting obligations—whether as a platform operator or an online seller—we can help. Get in touch with your usual Larking Gowen contact or email enquiry@larking-gowen.co.uk.

Sophie Emerson