Platform Tax Reporting

BobRachet

eskbanker said:

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....

But why will problems end? Start ups will keep coming, with buggy software. Even your trusted brands will get bugs a long way down the line, and what about hackers. Seems like a nice way to cause and awful lot of trouble.

BobRachet

[Deleted User] said:

BobRachet said:

[Deleted User] said:

BobRachet said:

Relying on hundreds of platforms to all report accurately just seems like a huge can of worms.

I don't understand how.  Let's say a platform reports that A sold £103,187 of stuff, B Ltd sold £34,567 and C sold £1,109.  How does that change anything?  Let's say that they made a mistake with some of the numbers, how does that change anything?  What am I missing?

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. 

Sorry, but that is just silly. 

People aren't taxed on the value of the assets they sell.  In my example A (sold £103,187), the person may have made a massive loss since, after deducting VAT, their net sale proceeds of £95,989 may be less than the aggregate of their purchase price, platform costs, delivery costs, staff cost, mobile costs, accountancy costs and capital allowances that they got for their new MacBook. 

People will already have included turnover and costs on their tax return or in their accompanying accounts.  There might be a difference between a VAT inclusive figure reported by the platform (I don't know if that is what they report) but it won't take long for HMRC to, where necessary, adjust for VAT.

HMRC will be able to cope with the profit and loss of course, the entire point of this reporting is to make sure people are submitting their self assessments accurately, based on the sales reports from these platforms. If there is a mismatch HMRC will investigate.

subjecttocontract

BobRachet said:

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.

Oh, thats good news, thanks.
Looks like the answer is to stick with Gumtree then !

BobRachet

[Deleted User] said:

BobRachet said:

the entire point of this reporting is to make sure people are submitting their self assessments accurately, based on the sales reports from these platforms. If there is a mismatch HMRC will investigate.

The whole point of self-assessment is that HMRC don't check every return made.  They check (i) a sample randomly, (ii) some high net worth ones, and (iii) some where they have information to suggest something may not be right.  That won't change with this.

What they may do is to use it to check obvious things:

- The platform reports sales of £1m - is there a VAT registration?
- The platform £80,000 of income from selling videos but this person does not do a tax return - is that right?

If someone gets a question like this, it should be resolved quickly. "No, I sold my stamp collection that is the work of my whole life, I don't need to register for VAT".

They may also go a stage further and do comparative reviews.  People selling widgets in the real world make a 20% margin, those who sell on the platform make a 1% a margin - why is that?  But HMRC already do that and it doesn't need information from the platform to do that.
 

I wont pretend to know exactly how HMRC operate but I'm going to assume if someone fails to report a few thousand of income and HMRC detect that using this new information they aren't going to simply ignore it. For the first few years maybe they will just send warning letters automatically as there is likely to be more culprits than they have the resources to investigate.

BobRachet

subjecttocontract said:

BobRachet said:

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.

Oh, thats good news, thanks.
Looks like the answer is to stick with Gumtree then !

Yep, at least this will get more people down the pubs again, until they ban cash

eskbanker

BobRachet said:
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.

BobRachet said:

But why will problems end? Start ups will keep coming, with buggy software. Even your trusted brands will get bugs a long way down the line, and what about hackers. Seems like a nice way to cause and awful lot of trouble.

Obviously it's second nature for the Tories to be pushing us towards communism....! 🤣🙄

I'm not advocating market dominance by big players and am unconvinced that this will discourage startups or drive them elsewhere but time will tell.  Regarding "the nature of this beast is that things online are bit more fast and loose with startups being created every year", the point is that if they're enabling sellers to receive taxable income then they can't expect to do so in a 'fast and loose' manner, with 'buggy software' or poor network security considered acceptable, and, like other businesses paying or facilitating such income, there will be reporting responsibilities.  Would you consider it OK for startup companies to be exempt from VAT, for example, on the basis that it might be a bit challenging to calculate it correctly?

Perhaps startups who consider themselves to be innovative will find ways around the new regime, in the way that (major) betting companies set up online operations in Gibraltar or wherever, but there's no reason for perfect to be the enemy of good, i.e. the difficulty of introducing a 100% bulletproof mechanism shouldn't be used as an excuse for doing nothing....

BobRachet

Have you seen the fines though? £5,000 plus £600 per day for each seller that has a reporting error. There is nothing like that for reporting VAT. Also when a platform reports VAT and makes a mistake that will only affect the platform, a mistake in this kind of reporting could effect millions of people. This is why start ups will not bother with the UK, it is just too much, especially when you consider this is all online and they can setup a business abroad no problem.

I do accept the reporting software should be robust but mistakes do happen, especially at start ups but seriously I would worry about even big name platforms like Vinted get this 100% right. Remember Horizon actually worked 99% of the time, but when you have something millions of people are using those 1% errors can be difficult to locate and the blame gets put on the user. That could easily happen all over again.

Hackers and fraudsters will be looking at this with glee. All a fraudster needs to do is pass the identification check process (which will all be automated) and hey presto they get to trade for a year and someone else finds HMRC is telling them they have a new income stream. It will be trivial to do this. Hackers wanting to get into a company's PAYE system would have a lot more work than accessing a website, we have heard so many stories of big name websites getting hacked, now there is more than just personal data they will be after. They will be able to monkey around with data that directly goes to HMRC. 

Considering HMRC already have powers to get income data from any platform they want, on an ad hoc basis, the actual problem can be tackled in a sensible way that isn't full of security and operational holes. This new way of doing things seems all clever and futuristic because it all happens automagically, but that is just wishful thinking.

booneruk

BobRachet said:

For people who are concerned about the new law that will mean online platforms will be reporting sales data to HMRC there is now an official petition.

https://petition.parliament.uk/petitions/654278

What makes something an 'official petition'?

Not signing that. Anyone who understands exactly what this new requirement on platforms is and opposes it is supporting a bit of the good ol' tax evasion (and I wonder how they feel about that subject when discussing it regarding 'rich people' with their mates in the pub). 

If platforms enable activity that generates taxable income and they're being exploited (they are) then I'm all behind these changes. That the UK is not alone in implementing this is a good thing - I wish more international agreements could be made regarding tax havens and the like also.

BobRachet

booneruk said:

BobRachet said:

For people who are concerned about the new law that will mean online platforms will be reporting sales data to HMRC there is now an official petition.

https://petition.parliament.uk/petitions/654278

What makes something an 'official petition'?

Not signing that. Anyone who understands exactly what this new requirement on platforms is and opposes it is supporting a bit of the good ol' tax evasion (and I wonder how they feel about that subject when discussing it regarding 'rich people' with their mates in the pub). 

If platforms enable activity that generates taxable income and they're being exploited (they are) then I'm all behind these changes. That the UK is not alone in implementing this is a good thing - I wish more international agreements could be made regarding tax havens and the like also.

It is official as it the government has accepted it as a valid petition and it will be discussed in parliament if it gets enough signatures. HMRC already has powers to catch people not reporting their income from platforms, if you read this thread I'm sure things will become clearer for you.

booneruk

BobRachet said:

booneruk said:

BobRachet said:

For people who are concerned about the new law that will mean online platforms will be reporting sales data to HMRC there is now an official petition.

https://petition.parliament.uk/petitions/654278

What makes something an 'official petition'?

Not signing that. Anyone who understands exactly what this new requirement on platforms is and opposes it is supporting a bit of the good ol' tax evasion (and I wonder how they feel about that subject when discussing it regarding 'rich people' with their mates in the pub). 

If platforms enable activity that generates taxable income and they're being exploited (they are) then I'm all behind these changes. That the UK is not alone in implementing this is a good thing - I wish more international agreements could be made regarding tax havens and the like also.

It is official as it the government has accepted it as a valid petition and it will be discussed in parliament if it gets enough signatures. HMRC already has powers to catch people not reporting their income from platforms, if you read this thread I'm sure things will become clearer for you.

From the petition site's homepage: "Anyone can start a petition as long as they are a British citizen or UK resident". If I start a position declaring I should be gifted millions it's not official.

oh, I've read the thread thanks, and I don't see a problem with the new obligations on platforms at all