Platform Tax Reporting

eskbanker

BobRachet said:
Because the numbers the platforms send to HMRC get compared to what the person submits on their self assessment. If there is a mismatch HMRC will investigate that person and accuse them of misreporting even if their figures are correct.

What support do you cite for that assertion?

BobRachet

eskbanker said:

BobRachet said:
Because the numbers the platforms send to HMRC get compared to what the person submits on their self assessment. If there is a mismatch HMRC will investigate that person and accuse them of misreporting even if their figures are correct.

What support do you cite for that assertion?

That's the entire point of this law mate. Obviously HMRC won't know about reporting errors at the start they will just have some poor women knitting hats telling them Etsy made a mistake.

eskbanker

BobRachet said:

eskbanker said:

BobRachet said:
Because the numbers the platforms send to HMRC get compared to what the person submits on their self assessment. If there is a mismatch HMRC will investigate that person and accuse them of misreporting even if their figures are correct.

What support do you cite for that assertion?

That's the entire point of this law mate. Obviously HMRC won't know about reporting errors at the start they will just have some poor women knitting hats telling them Etsy made a mistake.

Clearly if/when HMRC receive competing versions of the truth from platforms and sellers then they have a decision to make, but that's the same principle (albeit a different scale and rigour) as currently happens with information supplied by banks, employers, pension providers, etc, etc.  That doesn't mean that one party is automatically believed over the other....

BobRachet

eskbanker said:

BobRachet said:

Well if you look at the OECD guidelines they only recommended platforms with 1 million in turnover be included. The UK for some reason have taken that bit out. Putting that back would surely improve the situation.

If you're referring to https://www.oecd.org/tax/exchange-of-tax-information/model-rules-for-reporting-by-platform-operators-with-respect-to-sellers-in-the-sharing-and-gig-economy.pdf, the OECD doesn't recommend that as such, it simply presents an optional carve-out?

BobRachet said:

But you know HMRC already have powers to get this data from any platform they want, so if there is a problem with Onlyfans models or Uber drivers not reporting significant income then make a big show of prosecuting people so they get the message they can't hide. Relying on hundreds of platforms to all report accurately just seems like a huge can of worms.

Obviously the major platforms would be required to participate anyway, but yes, small platforms with low levels of business will no doubt feel aggrieved that they're being lumped in with the big players.  Having said that, it seems inevitable that HMRC would be focusing, initially at least, on the likes of those high profile ones that you mention, rather than paying much attention to dog-sitting or car parking, but it's perhaps unsurprising that the legislation doesn't narrow things down with a view to being broadened later....

This issue was discussed during consultation, so the pros and cons, together with the rationale for the decision not to exclude low-volume platforms, are covered at https://www.gov.uk/government/consultations/reporting-rules-for-digital-platforms/outcome/reporting-rules-for-digital-platforms-summary-of-responses

Good find, the goverment response to that issue is:

" A threshold adds burdens and uncertainty for platforms as they have to determine whether they fall within it or not. Smaller platforms may rapidly exceed the threshold so benefits may be limited or short term, and platforms would have to be very small to be captured by the exclusion given how low the threshold is."

Seems a pretty weak response to platforms who were asking for this threshold, but what do they know, the government has spoken for them ultimately.

So we go back to the situation where literally any platform of any size is now official tax reporting software on the side, and yes that includes startups who maybe don't have bullet proof software or the worlds best programmers. If things can go wrong at Fujistu they can go wrong at rentmysparebike.com 

BobRachet

eskbanker said:

BobRachet said:

eskbanker said:

BobRachet said:
Because the numbers the platforms send to HMRC get compared to what the person submits on their self assessment. If there is a mismatch HMRC will investigate that person and accuse them of misreporting even if their figures are correct.

What support do you cite for that assertion?

That's the entire point of this law mate. Obviously HMRC won't know about reporting errors at the start they will just have some poor women knitting hats telling them Etsy made a mistake.

Clearly if/when HMRC receive competing versions of the truth from platforms and sellers then they have a decision to make, but that's the same principle (albeit a different scale and rigour) as currently happens with information supplied by banks, employers, pension providers, etc, etc.  That doesn't mean that one party is automatically believed over the other....

I'm not sure HMRC compare tax returns to your bank statements (yet). Most people on PAYE won't do self-assessment although that is changing. But at least with PAYE you would usually have some pretty solid software behind the scenes, that has been tried and tested like SAGE. Platform reporting is going to be a myriad of bespoke software which by the way has all its data online, a hackers paradise. No doubt HMRC do have to sort out reporting errors from offline businesses now and again but the nature of this beast is that things online are bit more fast and loose with startups being created every year, I expect quite a lot of problems actually - even if HMRC don't.

subjecttocontract

Let's take Gumtree.....I've always found selling on Gumtree to be easy, quick & profitable. When an item is sold the seller will usually want to delete the ad. When I try to do that I'm given an option ......I have to tell them if my sale was successful or not. So, what's stopping me from saying it wasn't successful ? How will they know how much has been sold ? It's a mystery !

eskbanker

BobRachet said:
Good find, the goverment response to that issue is:

" A threshold adds burdens and uncertainty for platforms as they have to determine whether they fall within it or not. Smaller platforms may rapidly exceed the threshold so benefits may be limited or short term, and platforms would have to be very small to be captured by the exclusion given how low the threshold is."

Seems a pretty weak response to platforms who were asking for this threshold, but what do they know, the government has spoken for them ultimately.

Well yes, the consultation process was available to all, but the take-up was pretty low here, and ultimately the government makes the decision, it's never going to be based on a show of hands!

BobRachet said:
So we go back to the situation where literally any platform of any size is now official tax reporting software on the side, and yes that includes startups who maybe don't have bullet proof software or the worlds best programmers. If things can go wrong at Fujistu they can go wrong at rentmysparebike.com 

But the point is that platforms are now being required to have robust processes and systems in order to fulfil their obligations, so it's no longer going to be viable for them to expect to operate informally under the radar.  Sellers will presumably vote with their feet and only choose to do business via platforms that can convince them that they're capable of operating in a competent manner....

BobRachet

subjecttocontract said:

Let's take Gumtree.....I've always found selling on Gumtree to be easy, quick & profitable. When an item is sold the seller will usually want to delete the ad. When I try to do that I'm given an option ......I have to tell them if my sale was successful or not. So, what's stopping me from saying it wasn't successful ? How will they know how much has been sold ? It's a mystery !

Actually Gumtree isn't covered by this, the platform would have to take the money form the sale to be able to report. There are 3 exceptions; advertising sites, government sites and payment processors.

eskbanker

BobRachet said:
I'm not sure HMRC compare tax returns to your bank statements (yet).

Any bank or building society is required to submit annual reports to HMRC, notifying taxable interest earned by each individual, and HMRC do indeed use this data to feed into tax calculations or to compare with self assessments.

BobRachet said:
Most people on PAYE won't do self-assessment although that is changing.

How do your 'poor women knitting hats and selling them via Etsy' report that income currently?

BobRachet said:
But at least with PAYE you would usually have some pretty solid software behind the scenes, that has been tried and tested like SAGE. Platform reporting is going to be a myriad of bespoke software which by the way has all its data online, a hackers paradise. No doubt HMRC do have to sort out reporting errors from offline businesses now and again but the nature of this beast is that things online are bit more fast and loose with startups being created every year, I expect quite a lot of problems actually - even if HMRC don't.

I'm sure there will be plenty of problems initially, but that doesn't invalidate the entire exercise....

BobRachet

eskbanker said:

BobRachet said:
Good find, the goverment response to that issue is:

" A threshold adds burdens and uncertainty for platforms as they have to determine whether they fall within it or not. Smaller platforms may rapidly exceed the threshold so benefits may be limited or short term, and platforms would have to be very small to be captured by the exclusion given how low the threshold is."

Seems a pretty weak response to platforms who were asking for this threshold, but what do they know, the government has spoken for them ultimately.

Well yes, the consultation process was available to all, but the take-up was pretty low here, and ultimately the government makes the decision, it's never going to be based on a show of hands!

BobRachet said:
So we go back to the situation where literally any platform of any size is now official tax reporting software on the side, and yes that includes startups who maybe don't have bullet proof software or the worlds best programmers. If things can go wrong at Fujistu they can go wrong at rentmysparebike.com 

But the point is that platforms are now being required to have robust processes and systems in order to fulfil their obligations, so it's no longer going to be viable for them to expect to operate informally under the radar.  Sellers will presumably vote with their feet and only choose to do business via platforms that can convince them that they're capable of operating in a competent manner....

Well yes this law is very pro big business, but you seem to have an odd view of things. This literally involves any website that has the facility for people to sell anything or offer any service, while some major platforms have already cornered the market in some areas that doesn't mean we don't need startups innovating in new parts of the economy. These start ups will just locate their businesses off shore to avoid these rules and end up paying zero corporation tax to the UK. Those sellers making choices, will happily pick the service that doesn't ask for id checks and reports your income to HMRC, especially the sellers knowingly hiding their income.

The whole ethos of make everything run by a handful of  big trustworthy corporations is a few steps away for communism and is not how we got these nice things to play with in the first place.