The Platform Operators (Due Diligence and Reporting Requirements) Regulations 2023

Made: 18th July 2023

Laid before the House of Commons: 19th July 2023

Coming into force: 1st January 2024

The Treasury make the following Regulations in exercise of the powers conferred by section 136 of the Finance Act 2002[^f00001] and section 349 of the Finance (No. 2) Act 2023[^f00002].

PART 1 — Introductory Provisions

Citation and Commencement

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These Regulations may be cited as the Platform Operators (Due Diligence and Reporting Requirements) Regulations 2023 and come into force on 1st January 2024.

Interpretation

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• (1) In these Regulations—

• “HMRC” means His Majesty’s Revenue and Customs;

• “the model rules” means the model rules and commentary set out in OECD (2020), Model Rules for Reporting by Platform Operators with respect to Sellers in the Sharing and Gig Economy, OECD, Paris, approved by the OECD/G20 Inclusive Framework on BEPS on 29 June 2020, as amended by the OECD (2021) Model Reporting Rules for Digital Platforms: International Exchange Framework and Optional Module for sale of goods, OECD, Paris[^f00003];

• “partner jurisdiction” means a jurisdiction listed in a notice published by the Commissioners for HMRC under this regulation;

• “tribunal” means the First-tier Tribunal or Upper Tribunal as determined under Tribunal Procedure Rules[^f00004].

• (2) Any expression defined in the model rules but not in these Regulations has the same meaning in these Regulations as in the model rules.

• (3) Schedule 1 contains a table listing places where expressions that are used in these Regulations are defined or otherwise explained in the model rules.

• (4) In their application for the purposes of these Regulations, the model rules are to be read as if—

• (a) a reference to “[jurisdiction]” were a reference to the United Kingdom,

• (b) a reference to “the tax administration of [jurisdiction]” were a reference to HMRC,

• (c) in section I(A)(2) (definition of Platform Operator), for “an Entity” there were substituted “a legal or natural person, other than a person carrying on a business as a sole trader,”,

• (d) the expression “Partner Jurisdiction” had the meaning given by regulation 2(1),

• (e) the expression “Reportable Jurisdiction” meant the United Kingdom or any partner jurisdiction,

• (f) for the optional provision in section I(A)(3) (definition of excluded platform operator) there were substituted—

• An “Excluded Platform Operator” is a Platform Operator—whose entire business model is such that it does not allow Sellers to derive a profit from the Consideration; orwhose entire business model is such that it does not have Reportable Sellers.

• (g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (h) section II(G) (application of the due diligence procedures to active sellers only) of the model rules were subject to the modification in regulation 9,

• (i) the reference to “[date of entry into effect of rules in jurisdiction]” in section II(F)(2)(a) (timing and validity of due diligence procedures) were a reference to 1st January 2024, and

• (j) the optional provisions in Annex A were not included.

PART 2 — Due diligence, record-keeping and reporting obligations

Due Diligence and record-keeping

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• (1) A reporting platform operator must establish and maintain procedures that are designed to—

• (a) collect information about sellers,

• (b) collect, where applicable, information about property listings,

• (c) verify the information collected under sub-paragraphs (a) and (b), and

• (d) identify reportable sellers in respect of each reportable period.

• (2) A reporting platform operator must comply with paragraph (1) by applying the due diligence procedures set out in section II of the model rules.

• (3) A reporting platform operator must keep a record of—

• (a) the steps taken to comply with this regulation, and

• (b) the information collected in the course of applying the due diligence procedures referred to in paragraph (2).

• (4) A reporting platform operator must keep the records required by paragraph (3) for a period of five years beginning with the day after the end of the reportable period to which they relate.

• (5) For the purposes of paragraph (4), records in respect of a particular seller relate to each reportable period in which the information was—

• (a) collected,

• (b) generated, or

• (c) relied on under section II(F)(3) (reliance on due diligence procedures conducted in respect of previous reportable periods) of the model rules.

• (6) For the purposes of paragraph (4), records which are not in respect of a particular seller relate to all reportable periods.

Reporting of Information

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• (1) Subject to paragraph (5), a reporting platform operator must, for each reportable period, make a report to HMRC setting out the information in paragraph (2) on or before the 31st January following the end of the reportable period.

• (2) The information is—

• (a) in respect of the reporting platform operator, the information set out in section III(B)(1) (information to be reported with respect to reporting platform operators) of the model rules, and

• (b) in respect of each seller identified as a reportable seller in respect of the reportable period, the information set out in section III(B)(2) (information to be reported with respect to reportable sellers that provided relevant services other than immovable property rental) or (3) (information to be reported with respect to reportable sellers that provided relevant services for the rental of immoveable property) of the model rules, or both, as applicable.

• (3) Section III(A)(5) and (6) of the model rules applies to information with respect to consideration that is required to be included in a report.

• (4) Subject to paragraph (5), where a reporting platform operator must make a report for a reportable period including information in respect of a reportable seller, the reporting platform operator must provide that reportable seller with that information by no later than the 31st January following the end of the reportable period.

• (5) A reporting platform operator is not required to comply with paragraph (1) or (4) in respect of a reportable seller where—

• (a) either—

• (i) the reporting platform operator reasonably believes that another platform operator is required to, and will, include in a report under paragraph (1) the information it would otherwise be required to include in a report under paragraph (1), or

• (ii) subject to paragraph (5A), the reporting platform operator reasonably believes that another platform operator is required to, and will, report the information it would otherwise be required to include in a report under paragraph (1) to the tax authority of a partner jurisdiction under substantially similar rules, and

• (b) the reporting platform operator gives notice to HMRC by no later than the 31st January following the end of the reportable period of—

• (i) the fact that it relies on the exemption in this paragraph, and

• (ii) such information regarding the other platform operator as is specified in a notice published by the Commissioners for HMRC under this regulation.

• (5A) Where the condition in paragraph (5)(a)(ii) is met, the exemption from making a report in paragraph (5) does not apply if under section II(D)(1) of the model rules the reporting platform operator must consider the reportable seller resident in the United Kingdom.

• (6) The form and manner in which notice under paragraph (5) is to be given is specified in specific or general directions given by the Commissioners for HMRC.

Electronic report system

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• (1) A report under regulation 4(1) must be made electronically using an electronic report system.

• (2) The form and manner in which a report is to be made using an electronic report system is specified in specific or general directions given by the Commissioners for HMRC.

• (3) A report which is made otherwise than in accordance with paragraphs (1) and (2) is treated as not having been made.

• (4) An electronic report system must incorporate an electronic validation process.

• (5) Unless the contrary is proved—

• (a) the use of an electronic report system is presumed to have resulted in the making of a report only if this has successfully been recorded as such by the relevant electronic validation process,

• (b) the time of making the report is presumed to be the time recorded as such by the relevant electronic validation process, and

• (c) the person delivering the report is presumed to be the person identified as such by any relevant feature of the electronic report system.

Provision of Information

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• (1) In order to determine whether or not the obligations arising under these Regulations have been complied with, an officer of Revenue and Customs may require a person who the officer reasonably suspects is a reporting platform operator to provide such information or documents as the officer reasonably requires as specified by written notice.

• (2) The information or documents required by notice under paragraph (1) must be provided—

• (a) within such period, being no less than 30 days, and

• (b) by such means and in such form,

as is reasonably required by the officer of Revenue and Customs.

Notification to HMRC: reporting platform operators

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• (1) A reporting platform operator must give notice to HMRC that it is a reporting platform operator by no later than the 31st January following the end of the first reportable period.

• (2) The form and manner in which a notice under paragraph (1) is to be given is specified in specific or general directions given by the Commissioners for HMRC.

Notification to HMRC: excluded platform operators

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• (1) A platform operator that relies on the excluded platform operator exemption (see paragraph (2)) must give notice to HMRC.

• (2) A platform operator relies on the excluded platform operator exemption if—

• (a) it is an excluded platform operator,

• (b) it would be required to comply with regulations 3 (due diligence and record-keeping) and 4 (reporting of information) for a reportable period if it were not an excluded platform operator, and

• (c) it does not, in fact, comply with one or both of regulations 3 or 4 in respect of that reportable period.

• (3) Notice under paragraph (1) must be given by no later than the 31st January following the end of the first reportable period for which the platform operator relies on the excluded platform operator exemption.

• (4) The form and manner in which notice under paragraph (1) is to be given is specified in specific or general directions given by the Commissioners for HMRC.

Notification to HMRC: application of the due diligence procedures to active sellers only

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• (1) An election under section II(G) (application of the due diligence procedures to active sellers only) of the model rules must be made by notice to HMRC.

• (2) Notice under paragraph (1) must be given by no later than the 31st January following the end of the reportable period to which it relates.

• (3) A notice given under paragraph (1) has effect for the reportable period in which it is made, and for all subsequent reportable periods until it is withdrawn, including the reportable period in which it is withdrawn.

• (4) The form and manner in which a notice under paragraph (1) is to be given and withdrawn is specified in specific or general directions given by the Commissioners for HMRC.

Excluded Sellers: proportional reduction of thresholds

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PART 3 — Penalties for breach of obligations

Penalties for late reports

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If a reporting platform operator fails to make a report required under regulation 4(1) (reporting of information) on or before the date specified in that paragraph, the reporting platform operator is liable—

• (a) to a penalty not exceeding £5,000, and

• (b) if the failure continues after notice of an assessment of a penalty under paragraph (a) is issued, to a penalty or penalties not exceeding £600 for each subsequent day on which the failure continues.

Penalties for failure to provide information to reportable sellers

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If a reporting platform operator fails to comply with regulation 4(4) (reporting of information to reportable sellers), the reporting platform operator is liable—

• (a) to a penalty not exceeding £5,000 for each reportable period in respect of which one or more failures have occurred, and

• (b) if any of the failures continue after notice of an assessment to a penalty under paragraph (a) is issued, to a penalty not exceeding £600 for each subsequent day on which any of the failures continue.

Penalties for failure to provide information to HMRC

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If a person fails to comply with regulation 6 (provision of information to HMRC), the person is liable—

• (a) to a penalty not exceeding £5,000, and

• (b) if the failure continues after notice of an assessment of a penalty under paragraph (a) is issued, to a penalty or penalties not exceeding £600 for each subsequent day on which the failure continues.

Penalties for failure to comply with record-keeping requirements

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• (1) If a reporting platform operator fails to comply with regulation 3(3) (record-keeping), the reporting platform operator is liable to a penalty not exceeding £5,000 for each reportable period in respect of which one or more failures have occurred.

• (2) A failure has occurred in respect of a reportable period if the failure pertains to records which relate to that reportable period for the purposes of regulation 3(5) or 3(6).

Penalties for failure to notify

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• (1) If a reporting platform operator fails to comply with regulation 7 (notification to HMRC: reporting platform operators), the reporting platform operator is liable to a penalty not exceeding £1,000.