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Open consultation

Reporting rules for digital platforms - consultation
Published 30 July 2021

Contents
Summary
Foreword
1. Introduction
2. Scope and definitions
3. Due diligence procedures
4. Reporting information
5. Administration and enforcement
6. Assessment of impacts
7. Summary of consultation questions
8. The consultation process

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This publication is available at https://www.gov.uk/government/consultations/reporting-rules-for-
digital-platforms/reporting-rules-for-digital-platforms-consultation

Summary

Subject of this consultation

As announced at Budget 2021 (https://www.gov.uk/government/topical-events/budget-2021), the
government is consulting on the implementation of the Organisation for Economic Co-operation and
Development (https://www.oecd.org/about/) (OECD) Model Reporting Rules for Digital Platforms
(https://www.oecd.org/tax/exchange-of-tax-information/model-reporting-rules-for-digital-platforms-international-
exchange-framework-and-optional-module-for-sale-of-goods.pdf), which require digital platforms to report
details of the income of sellers on their platform to the tax authority and also to the sellers.

Scope of this consultation

The government is implementing the OECD model rules. Following consultation, these rules have
already been agreed internationally to ensure consistent requirements for platforms across different
jurisdictions, but they have optional elements and do not always describe in detail how jurisdictions
should implement them in practice. This consultation sets out the details of the rules, and invites
views on the optional elements and the UK’s proposed implementation of the rules. The consultation
also welcomes comments on the impacts arising from implementation, on how the information to be
reported could be used to help taxpayers get their tax right, as well as any practical issues.

Who should read this

The government invites comments from digital platforms that facilitate the provision of services, such
as taxi and private hire services, food delivery services, freelance work and letting of accommodation,
as well as those that facilitate the sale of goods and transport rental. The government also welcomes
views from organisations or bodies that represent platforms or businesses in the sharing or gig
economy.

This consultation will also be of interest to individuals and companies who provide such services
using digital platforms.

Duration

The consultation will run from 30 July 2021 to 22 October 2021.

Lead official

D Wigley, HM Revenue and Customs (HMRC).

How to respond or enquire about this consultation

Responses and requests for meetings can be sent to eoi.policy@hmrc.gov.uk.

Additional ways to be involved

HMRC are happy to have meetings with interested parties (virtually or in person, subject to current
restrictions) to discuss any issues raised in this consultation.

After the consultation

The government will consider the comments made by respondents and will publish a summary of
responses. The government will also consult on draft regulations before implementing the new
reporting rules and will engage with business on draft guidance.

Getting to this stage

In February 2020 the OECD consulted on proposed rules setting out how digital platforms should
collect information about the income of sellers and report it to tax authorities. The UK was involved in
the development and agreement of those rules. The OECD then published the finalised proposals as
the Model Reporting Rules in July 2020. Since then, the OECD has also extended the scope of the
model rules to include the sale of goods and transport rental. The amended rules, including the
extended scope, were published in June 2021.

At Budget 2021, the government announced that it will consult on the implementation of the OECD
rules, which would require UK platforms to report the information to HMRC and provide a copy to the
sellers to help them get their tax right.

Previous engagement

As well as taking part in the OECD consultation on the model rules, the government launched a call
for evidence at Spring Statement 2018 to learn more about the role that platforms could play in
ensuring tax compliance amongst their users. A summary of responses
(https://www.gov.uk/government/consultations/online-platforms-role-in-ensuring-tax-compliance-by-their-users)
was published in November 2018.

Foreword
The digital economy empowers individuals and businesses to connect with consumers both at home
and abroad. It thereby offers huge benefits and opportunities for UK businesses, workers, and
consumers, which is why the government is committed to encouraging the growth of the UK’s digital
economy.

However, the growth of the digital economy also creates challenges of compliance and tax collection
for HM Revenue & Customs (HMR”) and other tax authorities. To address some of these challenges
the OECD has developed model rules for digital platforms to report the income of individuals or
companies selling goods or providing services via their platform (“sellers”) to the tax authority where
the platform is resident, incorporated or managed. This information will then be sent to the tax
authority where the seller is resident. The platforms will also be required to provide a copy of the
information to the seller, which will help the seller declare the correct amounts for tax purposes.

The UK plays a leading role in promoting international tax cooperation and transparency, and the UK
government contributed to the development of the OECD model rules. At Spring Budget this year, the
Chancellor of the Exchequer announced that the government will consult on the implementation of
the rules and this announcement has been widely welcomed.

The new rules will improve international cooperation on the exchange of information for tax purposes.
They will allow HMRC to have access to data from platforms based outside the UK quickly and
efficiently, which should encourage compliance and increase the visibility of transactions. The rules

will also help taxpayers to get their tax right, and will help HMRC to detect and tackle tax non-
compliance. The fact that the rules are standardised is designed to ensure that platforms do not face
a patchwork of different tax reporting requirements across jurisdictions, minimising the administrative
burdens on them.

The government is aware of the need for proportionate and measured reform, especially given the
present recovery from COVID-19. The reporting rules for digital platforms will come into force from
January 2023 at the earliest. This will give a long lead-in time for platforms to prepare for the new
rules.

I would encourage the widest possible range of stakeholders to give their views through this
consultation process. The government welcomes feedback from digital platforms large and small, gig
workers and small businesses operating on platforms, and representative bodies, so that it can
ensure that the implementation of the OECD reporting rules for digital platforms is balanced and
effective.

Rt. Hon. Jesse Norman (https://www.gov.uk/government/people/jesse-norman), Financial Secretary to the
Treasury

1. Introduction

Background to the OECD model rules

1.1 The use of digital platforms, which are websites or apps that facilitate transactions between
providers of goods and services (sellers) and their customers, is growing rapidly. This provides the
opportunity for sellers to work more flexibly and more easily access customers globally at a lower
cost. As a result, there are increasing numbers of people who will need to declare their income from
online transactions and complete their own income tax return.

1.2 In some cases, sellers of goods and services may not get their tax right. This could be for a
variety of reasons including failing to understand their tax obligations, not keeping track of income
across multiple different platforms, or a conscious decision not to tell the tax authorities about their
taxable income. The flexibility of the opportunities created by platforms also leads to complexity in
sellers’ tax affairs. As a result, some sellers may under declare their taxable income or not declare it
at all.

1.3 Growing digital platform activity presents opportunities for tax authorities to have greater visibility
over sellers’ income and support them to be tax compliant, as transactions are recorded
electronically. This enables information sharing with tax authorities, as well as enabling sellers to
access a record of their transactions and income, making it easier to get their tax right.

1.4 Tax administrations may gain visibility over the income of sellers through requiring digital
platforms to report this information, with carve-outs for those who present a low compliance risk.
However, as platforms are based overseas, there is limited effectiveness in tax authorities operating
individually to implement domestic reporting agreements, given the challenges of enforcing such
reporting on companies overseas. This is an issue replicated across multiple jurisdictions. Such a
fragmented approach would also be burdensome and inefficient for digital platforms, who would have
to comply with multiple different reporting regimes.

1.5 The OECD therefore developed Model Reporting Rules with respect to the provision of services
(“model rules”) in consultation with the UK and other member jurisdictions to provide a standardised
way of collecting and reporting relevant information about sellers and their income from digital
platform activities to tax authorities. This approach enables jurisdictions to effectively enforce the
reporting regime on an international level and facilitates the exchange of information between such
jurisdictions. It also means platforms operating in multiple jurisdictions avoid facing a number of
different domestic reporting requirements.

1.6 The OECD published the model rules in June 2020 (https://www.oecd.org/ctp/exchange-of-tax-
information/model-rules-for-reporting-by-platform-operators-with-respect-to-sellers-in-the-sharing-and-gig-
economy.pdf). Jurisdictions can opt into implementing the model rules with the UK being one of the first
countries to confirm that it would do so. Subsequently, the OECD has included an optional module in
the model rules to extend their scope to the sale of goods and transport rental, and published the
resulting changes to the rules (https://www.oecd.org/tax/exchange-of-tax-information/model-reporting-rules-
for-digital-platforms-international-exchange-framework-and-optional-module-for-sale-of-goods.pdf) in June
2021.

How the model rules work

1.7 Broadly, the OECD model rules work as follows:

     platforms must collect certain details about their sellers, including information to accurately
     identify who the seller is and where they are based, as well as how much they have earned on
     the platform over an annual period
     platforms must verify the seller’s information to ensure it is accurate
     platforms must report the information, including the seller’s income, to the tax authority annually
     by 31 January
     platforms must also give that information to the sellers, so that they can use it to help them
     complete their tax returns
     tax authorities then exchange information with other tax authorities where the sellers are resident
     (or rental property is located)
     the information is used by tax authorities to ensure that sellers are complying with their tax
     obligations and to tackle non-compliance if they are not
     tax authorities must enforce the rules and see that platforms are operating them correctly, and
     there may be penalties for non-compliance

UK policy objectives in implementing the model rules

Making it easier for sellers to get their tax right

1.8 The government is committed to making it easier for taxpayers to get their tax right first time.
Requiring platforms to provide information to sellers about the income they have earned on the
platform will support this policy objective. This will raise sellers’ awareness of their tax obligations,
and support them to fill in their tax returns or check the information they have filed with the tax

authority is correct. The government is also considering how platforms can work with HMRC to build
on the work they already do to support their sellers to be tax compliant, for example, by providing
links to relevant HMRC guidance.

Identifying and tackling tax evasion and non-compliance

1.9 The government wants to bear down on tax evasion, particularly involving platforms located in
other jurisdictions. Implementing the OECD rules will allow the exchange of seller information with
other tax authorities which will give HMRC quick, efficient and secure access to data on UK resident
sellers and rental property in the UK from platforms based outside the UK. This will ensure that
taxable activities do not remain undetected or not declared.

Promoting international, standardised reporting rules for business

1.10 The government wants to simplify the reporting obligations and minimise compliance costs for
digital platforms. Implementing the model rules will provide platforms with a standardised and
consistent approach for collecting, verifying and reporting information across different jurisdictions,
and will avoid lots of different reporting requirements.

Limiting burdens on business and reporting high-quality and relevant information

1.11 The government recognises that the reporting requirements are an additional burden for
platforms, and will look to minimise that burden where possible while also ensuring the rules are
workable and effective. The information that platforms will be required to collect, verify and report will
only be the information that is necessary to ensure that tax authorities can match taxpayers and use it
effectively for compliance purposes. Much of this information is also likely to be collected by platforms
as part of their on-boarding process.

Introducing a proportionate but effective penalty regime

1.12 The government will develop a penalty regime to ensure that platforms comply with the rules and
report information which is accurate and of high quality by the deadline. Penalties for failure to comply
with the requirements of the rules, or for inaccurate or incomplete reports, should be proportionate
and an effective deterrent.

Maintaining the UK’s leadership on tax transparency and international cooperation.

1.13 The UK plays a leading role in promoting international tax cooperation and transparency, and is
one of the first jurisdictions to consult on implementing the model rules. Implementation of the model
rules will strengthen international cooperation between the UK and other implementing jurisdictions.

Aim and scope of the consultation

1.14 At Spring Budget 2021 the government announced that it would consult on the implementation
of the OECD model rules published in June 2020. As the model rules have already been consulted on
and agreed at an international level, the government intends to follow them closely to ensure a
consistent and standardised approach. However, there are areas of the model rules which are
optional for jurisdictions, or where jurisdictions have some discretion about how they are
implemented, such as the optional extension to the sale of goods and transport rental published in

June 2021. This consultation sets out the details of the OECD model rules at the start of each
section, points out where there is scope for any change, and then presents the government’s
proposed approach to implementing the optional or discretionary elements.

1.15 This consultation seeks views on the government’s proposals on those optional or discretionary
elements, not on the main rules or their details. It also welcomes comments on the impacts for
business from the UK’s proposed implementation of the model rules.

1.16 The final version of the OECD’s rules was published on 22 June 2021, too late to be
incorporated into this consultation in time for publication on 20 July (Legislation day). The consultation
has been published as soon as practicable, and in line with the government’s commitment to consult
over the summer of 2021.

Stakeholder engagement and next steps

1.17 The government would like to hear views from anyone who is affected by or interested in these
proposals including individuals, businesses, agents and representative bodies. HMRC will engage
directly with existing stakeholder networks and would be happy to have meetings with interested
parties. Please contact the lead official if you are interested in meeting to discuss this document.

1.18 Responses and general queries about the content or scope of the consultation can be sent by
email to eoi.policy@hmrc.gov.uk, using the subject “Reporting Rules for Digital Platforms”.

1.19 A summary of responses will be published after the consultation closes. The government will
also make regulations that will set out the requirements on platforms in the UK rules in detail. A
further technical consultation on draft regulations is expected to take place in 2022.

2. Scope and definitions

Key definitions and concepts

2.1 The scope of the OECD model rules is framed in terms of:

     the platforms that have to collect and report information
     the relevant services and goods that are provided
     the persons who provide those services and goods (‘sellers’)
     other definitions relevant to applying the rules

Platforms

2.2 A ‘Platform’ means any software, including a website or app, which allows sellers to be connected
to consumers of the goods and services offered by those sellers. This includes third party sellers that
provide the goods or services directly to users (customers), as well as platforms that purchase
services or goods from sellers and offer them in their own name.

2.3 Platforms may provide services themselves such as operations to collect payments from users
and pass them to sellers either before or after they have provided the relevant goods or service.
However, software that merely lists or advertises services, or just processes payments, or only

redirects or transfers users to another platform does not meet the definition of a platform. This is
because it does not immediately facilitate the linking up between sellers and users for the provision of
services.

2.4 More specifically, the model rules refer to a ‘Platform Operator’. This is an entity (a legal person or
arrangement other than an individual) that contracts with a seller to make all or part of the platform
available to the seller, or that collects payments from users for relevant services facilitated through
the platform. As part of the contractual arrangements, platform operators will have various legal
obligations to know their sellers, so should be well placed to obtain the information from the seller to
comply with the model rules.

2.5 Platform operators are subject to the model rules, and are therefore ‘Reporting Platform
Operators’, if they:

     are resident for tax purposes, incorporated or managed in a jurisdiction adopting the rules
     have not been specifically excluded
     facilitate the provision of relevant services

Excluded platform operators

2.6 Jurisdictions implementing the model rules can also choose to exclude certain platform operators
from the requirements to report information. The model rules include three optional categories of
‘Excluded Platform Operators’. These are platform operators that:

a. facilitate the provision of relevant services for which the total payments (or ‘consideration’) over the
previous year are less than 1 million euros, and that make an election to be treated as excluded from
reporting

b. demonstrate that the platform’s business model does not allow sellers to profit from the payments
received, or

c. demonstrate that they do not have any ‘reportable sellers’ (see paragraph 2.22)

2.7 These exclusions ensure that small-scale platform operators such as start-ups, and those where
the risk of any non-compliance with tax obligations by their sellers is very low, do not have to collect
information and report it. However, platform operators that fall within the first of the exclusions may
also choose to be subject to the model rules if, for example, they expect to grow rapidly and adopting
the rules would make future compliance with the rules easier.

2.8 The government wants to ensure that the reporting rules are proportionate and minimise burdens
for platforms where possible. The government also wants to promote growth amongst UK start-up
companies so does not want to impose additional burdens on small platforms. The government
therefore proposes that all three optional categories of excluded platform operators should be
incorporated in the implementing regulations, and that platform operators should also be able to
choose to opt out of the first of the exclusions in paragraph 2.6.

2.9 The government needs to be able to identify platforms which are not reporting because they are
subject to the exclusions (and have chosen to be excluded), so that these platforms are not subject to
enforcement procedures. The government therefore proposes that platform operators should be
required to indicate if they want to be excluded from the scope of the rules.

2.10 The government envisages that platform operators will be able to indicate whether they fall
within the exclusion categories, and hence are exempt from the reporting requirements, as part of the
initial registration process, or subsequently if their circumstances change (see paragraph 4.12).

Question 1

Do you agree with the government’s proposals on excluding certain platform operators? Please
indicate whether you think platforms would make use of the exclusions in practice and what factors
might influence these decisions.

Relevant services

2.11 Only certain services provided by sellers come within the scope of the model rules. These
‘relevant services’ are rental of ‘immovable property’, ‘personal services’ and transport rental if they
are provided for a ‘consideration’.

2.12 ‘Immoveable property’ includes residential and commercial property and other fixed property
such as parking spaces. Rental includes both short and long-term rentals, irrespective of how the
property is held (freehold, leasehold etc.). However, some hotel accommodation is excluded – see
paragraph 2.21.

2.13 A ‘personal service’ covers a wide range of services involving time or task-based work
performed by a seller, or one or more individuals if the seller is an entity, at the request of a user. It
involves work carried out online as well as performed offline at physical locations, and includes the
following:

     transport services (such as taxis and private hire)
     delivery (for example, food delivery)
     freelance & professional work (such as accountancy, clerical and legal tasks)
     providing labour (for example, gardening, housekeeping, renovation)
     online services (data entry, IT services, copywriting)
     seasonal and temporary work (such as at restaurants or events)
     services provided by a group of sellers or to several users at the same time

2.14 However, a ‘personal service’ does not include a service provided by a seller who is an
employee of a platform operator, or of an entity related to that platform operator, because they will
already be subject to PAYE. For these purposes, entities are related if either controls the other or both
are under common control. A service also does not qualify as a ‘personal service’ if it is incidental to a
transaction, for example, packaging goods which have been sold to a user.

2.15 The model rules allow jurisdictions to include an ‘expansion mechanism’ within the definition of a
relevant service to add further categories of services to future proof the rules so that they may adapt
as new business models emerge and the sharing and gig economy develops. The government
considers that a specific expansion mechanism is not needed as the power to make the regulations
for implementing the model rules, which the government introduced in section 129 Finance Act 2021,
allows for the regulations to be amended if the model rules are subsequently revised to expand the
scope of relevant services.

Consideration

2.16 The model rules define the ‘consideration’ that sellers receive for providing services or selling
goods as “compensation in any form that is paid or credited to a Seller in connection with Relevant
Services, the amount of which is known or reasonably known by the platform operator.” This can
include money, cryptocurrencies, payments in kind, tips, gratuities and incentives paid or credited to a
seller. It is considered to be paid to a seller if an amount is paid or credited to an account specified by
the seller, even if the account is not in the seller’s name. The amount of consideration paid or credited
is after deduction of any fees, commission or taxes withheld or charged by the platform operator;
these are reported separately (see paragraph 4.3).

2.17 Sellers may receive consideration for services either directly from customers, or via the platform
operator. For example, the platform operator may receive a payment from the customer and then
pass it on to the seller. If a platform operator withholds a fee, commission or tax based on amounts
paid by customers, the platform operator would be expected to reasonably know the amount received
by the seller. However, where the platform operator does not know, or is not reasonably expected to
know, the amount that has been paid to the seller for a service, the payment is not treated as
‘consideration’ and therefore the service provided is not a ‘relevant service’.

Sellers

2.18 A ‘seller’ is a user who is registered on a platform to provide relevant services or sell goods. It
can be an individual or an entity. Registration is interpreted broadly and can include, for example,
where a user has created a profile or account with the platform, as well as being contracted by a
platform operator.

2.19 A seller is defined as an ‘active seller’ if they provide relevant services during a reportable
period, or are paid or credited during that period. It follows that sellers who are registered with a
platform but who do not provide any services or who are not paid for services during a reportable
period are not ‘active’, and platform operators do not have to report any information about them.

2.20 Certain sellers present a very low compliance risk as they are usually aware of their tax
obligations, are subject to other forms or regulation, or do not represent typical sellers in the gig and
sharing economy. The model rules carve out three categories of ‘excluded sellers’ from their scope.
These are broadly entities that:

     provide more than 2000 property rentals per year (generally large providers of hotel
     accommodation)
     are government entities (including local authorities and government agencies), or
     are listed entities, or related entities, whose stock is regularly traded on an established securities
     market

In addition, as part of the extension of the scope, the amended OECD rules also exclude occasional
sellers who make less than 30 sales of goods a year for a total of not more than €2,000 (see
paragraph 2.25).

2.21 Although the model rules require platform operators to collect information and carry out due
diligence procedures on all their sellers apart from those that are specifically excluded (see Chapter
3), platform operators only have to report information about ‘reportable sellers’. These are defined as

active sellers, other than excluded sellers, who are resident or who have rented immoveable property
located in a ‘reportable jurisdiction’.

2.22 For the purposes of determining reportable sellers, a ‘reportable jurisdiction’ is one which
exchanges reportable information with another reportable jurisdiction. They are expected to be
identified in a list published by the OECD which reflects exchange of information agreements. This
ensures that information about sellers is collected and exchanged only with the relevant jurisdictions
that have implemented the model rules.

2.23 The model rules allow jurisdictions to require reporting on all sellers if this is permitted under
domestic legislation. However, the government proposes that UK platform operators should only
report information about sellers who are resident in the UK or in another reportable jurisdiction, which
avoids platform operators reporting information that will not be used or exchanged by HMRC. The
required information includes the seller’s country of residence (see paragraph 4.3) so that the details
are exchanged with the jurisdiction in which the seller is resident. For property rentals, UK platform
operators will also have to report information about sellers who rent out property in the UK or in other
participating jurisdictions. The required information includes the address of the rented property so that
the information can be exchanged with the jurisdiction in which the property is located.

Question 2

Are the definitions on the scope of the model rules sufficiently clear? Are there scenarios not
anticipated by the rules where guidance is needed?

Extension of scope

2.24 In June 2021, following consultation with stakeholders, the OECD introduced an optional
extension of the model rules that allows interested jurisdictions to implement them with an extended
scope to also cover the sale of goods and transport rental. The wider scope is achieved by extending
the definition of a relevant service to include the rental of ‘a means of transportation’, and adding a
new ‘relevant activity’ to the rules, which includes a relevant service or the sale of goods for a
consideration. ‘Goods’ in this context means any tangible property.

2.25 In addition, as outlined in paragraph 2.20, the definition of an ‘excluded seller’ is extended to
cover sellers where the platform operator solely facilitated less than 30 relevant activities for the sale
of goods and for which the total consideration paid or credited was not more than €2,000 during the
reportable period (a calendar year in which the platform operator is required to report). This ensures
that ‘casual’ sellers that only make occasional small sales of items are not caught by the extension of
the rules.

2.26 The government proposes to adopt the extension as the wider scope will increase the benefits of
implementing the model rules for sellers, platforms, and HMRC. The extension broadens the range of
sellers that will be helped to comply with their tax obligations and also enables HMRC to detect and
tackle tax non-compliance in relation to the additional activities.

Question 3

Is any additional guidance needed in light of the government’s plans to adopt the extension of scope
in its implementation of the model rules?

Interaction with DAC 7

2.27 In March 2021, the Council of the European Union adopted an amendment to the Directive on
Administrative Cooperation (Council Directive 2011/16/EU on administrative cooperation in the field of
taxation (https://www.legislation.gov.uk/eudr/2011/16/contents)) known as DAC 7. This amendment
extended the European Union’s (EU’s) automatic exchange of information rules to include reporting
requirements for digital platforms. DAC 7 is largely based on the OECD model rules published in
June 2020 but with a broader scope that includes the sale of goods and transport rental as relevant
activities. The new rules will apply from 1 January 2023 and include an obligation for digital platforms,
regardless of whether or not they are based in the EU, to provide information about the income of
sellers that are located, or whose rental property is located, in the EU. DAC 7 therefore creates
obligations for some UK platforms.

2.28 The extension of scope to the model rules to goods gives implementing jurisdictions the option
of aligning with the scope of DAC 7. This provides the opportunity for EU and non-EU jurisdictions to
exchange information on all relevant activities covered by DAC 7 by implementing the model rules.

2.29 DAC 7 contains a provision to prevent double reporting by platforms which are within the scope
of the two sets of rules. It is expected that with the adoption of the model rules extension, UK
platforms which fall within the DAC 7 rules can report directly to HMRC under the model rules, rather
than reporting to an EU Member State under DAC 7. HMRC would then exchange the information
with the tax authority in the relevant EU Member State.

2.30 The government’s aim is to ensure that the reporting requirements minimise burdens for
platforms and work well in practice. The government would therefore welcome comments on whether
the interaction of the model rules and requirements of DAC 7 would impose any additional burdens
on platforms in practice to better understand the impact of the two regimes.

Question 4

Do you have any comments on how you would like the interactions of the model rules and DAC 7 to
operate in practice?

3. Due diligence procedures
3.1 The model rules require platform operators to carry out due diligence procedures to ensure that
the information they collect and report about sellers is useful, relevant and accurate for tax
authorities. Due diligence processes should also be proportionate and minimise burdens on platform
operators where possible. This chapter sets out the various due diligence procedures that the model
rules require platform operators to carry out, discusses the options for some of the information that
has to be provided, and sets out the government’s proposals for optional elements of the
requirements.

Identification of excluded sellers

3.2 Some sellers are excluded from the scope of the model rules (see paragraph 2.20). Platform
operators will therefore need to identify which of their sellers are excluded and not subject to due
diligence and reporting. The method they will use to do so depends on the type of excluded seller.

3.3 The model rules state that platform operators may rely on their available records of sellers and
property listings to determine if a seller qualifies as an excluded seller if they are:

     an entity that provides more than 2000 property rentals per year (generally large-scale hotel
     businesses who are likely to be aware of their tax obligations), or
     an occasional seller who has undertaken less than 30 sales of goods and for which they were
     paid not more than €2,000 for the reportable period

This determination can be done at the end of the reportable period, for example, on the basis of the
actual transactions carried out. Alternatively, platform operators may put other procedures in place at
an earlier stage to determine if any of their sellers are likely to meet the exclusion criteria. For
example, if a seller has consistently made significantly more than 2000 property rentals each year
and is likely to continue to do so, the platform operator may decide that the seller will qualify as an
excluded seller at the start of the reportable period.

3.4 For government and listed entities, platform operators may rely on publicly available information
or on a confirmation from the entity seller to determine whether they meet the conditions for this type
of excluded seller.

Collection of seller and rental property information

3.5 The model rules set out the information that platform operators will be required to collect for all
sellers, other than excluded sellers. The type of information to be collected depends on whether the
seller is an individual or an entity, and the nature of the activity carried out by the seller.

3.6 For each individual seller, the required information is:

     first and last name (and middle name if provided)
     primary address (usually their home address, unless the platform only collects a billing address)
     tax identification number (TIN) and the jurisdiction which issued it
     date of birth

3.7 For each entity seller, the required information is:

     legal name
     primary registered office address
     TIN and jurisdiction of issue
     business or company registration number (if different from the TIN)

3.8 Where a seller provides property rental services, platform operators are also required to collect
the address of each property listing. For this purpose, ‘property listing’ means all immovable property
units, including rooms, apartments, houses or other forms of fixed property, at the same street
address and offered by the same seller. For example, multiple rooms in a hotel or separate
apartments in a building with a single street address are treated as a single property listing. Platform
operators should usually be aware of rental property details as they will provide this information to
users; but if not they will need to put procedures in place to collect and verify the address of the
property.

3.9 The information to be collected reflects its importance and use by tax authorities to identify sellers
and match them to details held on their databases, and to determine the residence of the seller or the
jurisdiction in which a rental property is located. For example:

     the date of birth is important to ensure that individuals who may have the same or very similar
     names living at the same address can be distinguished and matched to their tax records
     a TIN will enable a tax authority to identify an individual or entity and match them with their tax
     records (see paragraphs 3.10 to 3.17)
     the primary address will be used to determine where an individual lives or where an entity’s
     registered office is located to determine the residence of a seller and link them to a jurisdiction
     for reporting purposes (see paragraph 3.21)
     the address of a rental property will be used to identify the jurisdiction where it is located so that
     information about the seller can be sent to the appropriate country

Question 5

Do you have any comments on the practical application of the rules on collecting the required
information about sellers and rental property?

Tax Identification Number (TIN)

3.10 The TIN is a unique number, or number/letter combination, which enables an individual or entity
to be identified and matched with their tax records. It provides a convenient and more reliable method
for matching taxpayers than using a name (which may not be unique) and address (which could be
out of date or incorrect). The TIN must be issued by the jurisdiction where the seller’s primary
address is located so that it can be used by that jurisdiction on receiving the information to link the
seller to their taxpayer databases. Some jurisdictions issue a TIN to all taxpayers. Where a
jurisdiction does not issue a TIN, another functionally equivalent number can be provided instead,
such as a social security number or personal registration number.

3.11 The model rules do not specify which type of reference number should be used as a TIN as this
will be different for each jurisdiction. For UK resident sellers there are several possible options for a
TIN – a Unique Taxpayer Reference (UTR), National Insurance number (NINO), Company
Registration Number (CRN), VAT Registration Number (VRN) or a bespoke registration number/code.
The government is currently minded to propose that platform operators can report a TIN from a range
of options for UK resident sellers. This is because there does not seem to be an ideal TIN to use for
both individuals and entities, and each option has advantages and disadvantages.

For individuals

3.12 A NINO can be used to match an individual’s personal data to their tax record and can be
shared with third parties in some cases so it could be a suitable TIN. Although NINOs are commonly
used, they are still sensitive pieces of information so platform operators will need to ensure that the
details are held securely and not disclosed inappropriately. However, some UK sellers may not have
a NINO; for example, if they are not employees or self-employed, or do not claim benefits, or if they

do not have a specific reason to be issued with a NINO. This is only likely to apply to a very small
number of individuals who provide property rental services but it nonetheless creates a difficulty as
such individuals will not be able to obtain a NINO and provide one as a TIN.

For entities

3.13 For UK companies and other entities, the CRN is already held on HMRC’s systems and can be
used effectively for matching purposes. It is also in the public domain at Companies House. The CRN
therefore seems to be an obvious choice for a TIN for UK sellers who are entities but it will not be
relevant for individuals, or for some companies operating through a platform who were incorporated,
or are resident, outside the UK.

For individuals and entities

3.14 UK sellers who are self-employed or within Self Assessment for another reason are very likely to
have a UTR, which could be used to accurately match their details with their tax records. This could
be an option for individuals who do not hold a NINO. Although as a general principle HMRC advises
taxpayers not to disclose their UTR to anyone to help protect customers from fraud and identity theft
and prevent unauthorised access to HMRC systems and records, UTRs are reported and exchanged
in other exchange of information agreements, such as the Common Reporting Standard (CRS) for
financial accounts. Platform operators would need appropriate levels of security to keep the UTR
details protected and secure.

3.15 Another option for a TIN is the VRN if it is available. This is also in the public domain so presents
fewer disclosure risks than a NINO, and can be checked to see if the number is valid and the name
and address of the business is correct. However, UK sellers who are not registered for VAT will not
have a VRN. In some circumstances there is more than one VRN associated with a business, so it
may not be very effective for matching purposes.

3.16 A possible alternative option that the government is exploring is to introduce a new ‘verification’
service for the purposes of the model rules (see paragraph 3.26) which sellers could use to generate
a bespoke code or reference number that could be used as a TIN. This option would have the
advantage of applying to all UK sellers and has the lowest disclosure risk since the reference
number/code would not be used for any other purpose. On the other hand, it would create another
reference number that sellers would need to note. If the government was minded to introduce a
verification service it would take time to implement and it may not be available when the rules are
currently expected to come into force in January 2023.

3.17 The government is keen to hear from both platforms and sellers on which one or more options
above would be a good choice for a TIN.

Question 6

Which number, or combination of numbers, would be appropriate to use as a Tax Identification
Number (TIN)? Please give reasons to support your view.

Verification of seller information

3.18 The model rules require platform operators to verify the information provided by the seller to
make sure it is accurate and reliable. This must be done using all available records including
information already collected or maintained for on-boarding, payment, regulatory or other commercial
purposes. For example, the name of a seller must be verified against government identification
documents the platform operator holds, as well as cross checking the details with financial records,
emails or other available information. Likewise, a seller’s address and country where the TIN is
issued must be verified against transactional records that can identify and confirm where the seller is
resident. Such checks should take into account other relevant information that show the link between
the seller and jurisdiction, such as a local IP address. Platform operators should also use any publicly
available checking tools or verification services to confirm the validity of a TIN such as a CRN or
VRN.

3.19 Where sellers are already active before the rules are implemented or the platform operator is
required to report, the verification of collected information may be done using available existing
electronically searchable records. If some of the information is no longer reliable, for example, when
an address becomes out of date because the seller has moved, the platform operator is required to
collect new information or documentation to correct or update the details. That new information also
has to be verified using all available records so that the platform operator can show that all the data
collected about a seller is reliable, up to date and accurate.

3.20 In some cases, a platform operator may be informed by a tax authority that certain previously
collected and verified data is inaccurate. This could happen, for example, if a tax authority has
received data on a seller following an exchange of information and cannot match a record to the
taxpayer, or it has some other reason to believe the information is inaccurate. In these cases, the
platform operator must collect the relevant information again and verify it using reliable independent
documents or data.

Determination of sellers’ jurisdiction of residence

3.21 Once collected information has been verified, platform operators will need to determine the
jurisdiction of residence of a seller so that it can be reported to the appropriate tax authority. The
model rules explain that the jurisdiction of residence of a seller is usually the jurisdiction in which the
seller’s primary address is located. In most cases the primary address will be the seller’s home
address (for individuals) or registered office address (for entities). A platform operator should
therefore be able to determine a seller’s jurisdiction of residence from their home or registered office
address.

3.22 Alternatively, if a Government Verification Service is available (see paragraph 3.26) in the
jurisdiction where the seller has their home or registered office address, the platform operator may be
able to use it to determine a seller’s jurisdiction of residence. The platform operator should be able to
use the service to confirm the seller’s name and primary address. That address will then determine
the seller’s jurisdiction of residence.

Question 7

Do you have any comments on the practical application of the rules for collecting and verifying the
data?

Government Verification Service (GVS)

3.23 The model rules require platform operators to collect from sellers the information listed in
paragraph 3.6 and 3.7. The only exception to this is where a jurisdiction provides a ‘Government
Verification Service’. This is an electronic process that is made available by a jurisdiction and allows
platform operators to confirm the identity and/or residence of a seller. It may include the use of
Application Programming Interfaces (APIs) which are a type of software that connects computers or
applications so they can ‘talk’ to each other.

3.24 It is up to a jurisdiction to decide on the appropriate scope for a GVS for these purposes. As an
illustration, the commentary (See paragraph 63 on page 19 of the Model Rules
(https://www.oecd.org/tax/exchange-of-tax-information/model-reporting-rules-for-digital-platforms-international-
exchange-framework-and-optional-module-for-sale-of-goods.pdf)) on the model rules proposes one possible
process for a GVS identification method:

a. a reporting platform operator identifies that a seller is linked to a GVS jurisdiction during its on-
boarding process and directs the seller to the GVS portal

b. the seller provides their details (for example, a TIN or user name) which enables the GVS to
identify the seller

c. the jurisdiction/GVS provides the reporting platform operator with a unique reference number/code

d. the platform operator includes the number/code in the information they report allowing the
jurisdiction receiving that information to match it with their seller database

3.25 Separately, HMRC is introducing a ‘tax check’ that will take place when people renew their
licences to drive taxis or private hire vehicles, or deal in scrap metal. A new digital service is being
developed to enable individuals and companies in these sectors to do the tax check and obtain a
code, which will be used by the licensing body to obtain confirmation from HMRC that the licence
applicant has carried out the ‘tax check’. Broadly, the service is expected to work as follows:

     The applicant will use the digital service to provide some basic information about themselves,
     their licence and their tax situation to complete the tax check
     If the details match the ones held by HMRC’s systems, the applicant will be given a tax check
     code, which they will give to the licensing body with their application
     The licensing body will be able to access the service using the code and the applicant’s ID
     details and licence type to get confirmation that they have completed the tax check

3.26 The government is considering whether this ‘tax check’ service could be adapted and used as a
GVS since it has many of the features outlined in the process proposed in the model rules
commentary. For example, a seller might be able to use a similar digital service to provide their
personal details which would be checked against information about the seller held by HMRC systems.
If there was a match, the seller would be given a unique code which they could pass to their platform
operator. The platform operator would be able to use the code to access the service to confirm the
identity and address of the seller, thus avoiding the need to verify that information with its own
records. The unique code could also be used as a TIN (see paragraph 3.16) and could be reported to
HMRC in order to match the seller with their tax records.

3.27 There is no suggestion that a seller would be required to use the service and get a code in order
to become a seller, or to provide services or sell goods on a platform. Even if the government is
minded to implement a GVS, then it may not be developed in time to be available from the start of

implementation.

3.28 The government welcomes comments on whether platforms, sellers and other stakeholders
would make use of such a service if it was available, or if they would prefer to collect and verify the
information by a different method, and any potential practical issues a GVS might create.

Question 8

Would stakeholders (both sellers and platforms) find a Government Verification Service useful if one
was available? Please give reasons for your view.

Timing and validity of due diligence procedures

3.29 The model rules also state that platform operators must complete the due diligence procedures
by 31 December of the reportable period. This is defined as any calendar year in which a platform
operator must report under the rules as a reporting platform operator. However, the model rules
provide some flexibility around timing for new reporting platform operators and processes for
established platform operators.

3.30 For entities who become reporting platform operators for the first time (due to the introduction of
the rules, or because they are a new platform, or are no longer an excluded platform operator), the
due diligence procedures outlined above are only required to be completed by 31 December of the
second reportable period in which the platform operator is subject to the reporting rules. This is to
ensure platforms have enough time to collect and verify the required information and build the
relevant IT systems. The extended deadline means that, for example, if a platform becomes a
reportable platform operator in January 2023 (so their first reportable period is the year ended 31
December 2023), it must complete the due diligence procedures by 31 December 2024. However,
some platform operators may wish to complete their due diligence procedures and report the
information to tax authorities and/or sellers earlier than this extended deadline.

3.31 The rules also acknowledge that collected and verified information about sellers or their
residence status may remain unchanged over time. Platform operators may therefore rely on due
diligence procedures for previous reportable periods provided that:

     the primary address of each seller has either been collected and verified or confirmed in the last
     36 months
     the reporting platform operator does not have any reason to believe the info collected is incorrect
     or unreliable

This confirmation could be made by, for example, a statement from the seller that their previously
collected address is still valid.

Application to active sellers

3.32 The model rules provide an option for completing the due diligence procedures only for active
sellers in a reportable period (see paragraph 2.19). This means that platform operators can choose to
collect and verify seller details and determine their residence from the date that a seller provides a
relevant service or sells goods or is paid for those activities. In other words, platform operators can
opt not to carry out due diligence procedures for new sellers who have only just registered with the

platform or for existing sellers who are not active. The government supports this option to reduce
administrative burdens for platform operators and will include the relevant provisions in the
regulations.

3.33 Platform operators who make use of this option should have procedures and enforcement
measures in place to ensure that all active sellers have provided the required information by 31
December of a reportable period. The model rules suggest that these measures could, for example,
include mechanisms to prohibit undocumented sellers access to the platform or withhold payment
from such sellers until they provide the information. However, the government considers that it is the
responsibility of platform operators to decide what enforcement measures are appropriate and does
not propose any additional requirements to compel platform operators to put such measures in place
(see paragraph 5.14).

Due diligence by third parties

3.34 Platform operators may also rely on an independent third party service provider, including
another platform operator, to carry out the due diligence procedures, especially if they have better
resources or technology to do so. This takes into account the situation where platforms use a number
of platform operators to provide different services or functions in one or more jurisdictions. For
example, one platform operator may provide access to the platform’s website, while another platform
operator may collect payments from users. Where there is more than one platform operator in respect
of a platform, any of the platform operators may carry out the due diligence procedures in respect of
all or a defined group of sellers. This arrangement avoids duplication of the due diligence processes
by multiple platform operators with respect to the same platform.

3.35 In order for a platform operator to rely on a third party to perform the due diligence, it should put
appropriate contractual arrangements in place to ensure that:

     information needed to complete the procedures is available to the third party service provider
     the platform operator can obtain any information collected and verified on sellers from the third
     party provider

Even if due diligence procedures are carried out by another platform operator or third party service
provider, the reporting platform operator remains responsible for their completion and must be able to
demonstrate compliance with the due diligence requirements.

3.36 Where a platform operator carries out due diligence procedures for a reporting platform operator
in a different jurisdiction, it can rely on the rules in its own jurisdiction provided they are substantially
similar to the ones in the other country. This ensures the due diligence procedures are consistent
across a number of jurisdictions.

Question 9

Do you have any comments on the practical application of the rules in relation to the timing, active
seller option and third party due diligence requirements?

4. Reporting information

4.1 The model rules require platform operators to report certain information to tax authorities so that it
can be exchanged with other tax authorities, or used by a tax authority for its own compliance
purposes, and also given to the sellers to help them comply with their tax obligations. The rules, and
this chapter, set out:

     the details of the information that must be reported about the platform operator, sellers and
     property rentals
     the manner in which the information has to be reported
     the deadlines for reporting the information to tax authorities and sellers
     the circumstances in which information does not have to be reported

Information to be reported

4.2 Each reporting platform operator must provide the following identification information:

     their name, registered office address and TIN
     the business name(s) of the platform(s) in respect of which they are reporting

4.3 For each reportable seller who has provided ‘relevant services’ other than immoveable property
rental (see paragraph 2.10), a reporting platform operator must report the following information to
identify the seller and the jurisdiction that they are linked to for reporting purposes, and to provide
details of the payments made to them:

     details of the seller (see paragraphs 3.6 and 3.7)
     any other TIN available to the reporting platform operator, such as a VAT number
     the ‘financial account identifier’ – if this is available (see paragraph 4.5)
     the name of the holder of the account to which payments are made – if this is different to the
     name of the seller and available – and any other available identifying information
     the country in which the seller is resident on the basis of their address (see paragraph 3.21)
     the total ‘consideration’ paid (see paragraph 2.16) during each quarter of the reportable period
     and the number of services for which it was paid
     the amount of any fees, commission or taxes withheld or charged by the platform operator during
     each quarter

4.4 For each reportable seller who has provided immoveable property rental services, a reporting
platform operator must report the following information:

     the information listed in paragraph 4.3
     the address of each property listing (see paragraph 3.8)
     the number of rentals with respect to each property listing
     the number of days each property listing was rented during the reportable period and the type of
     listing – if available

Bank account information