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Model Reporting Rules for Digital Platforms

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OECD Model Reporting Rules

From January 2023, digital platforms that enable individuals to earn money by selling services through them will become responsible for reporting sellers’ income to HMRC. This is in addition to the self-employed individuals themselves continuing to submit this information to the tax office on their self-assessment tax return.

If there are any discrepancies between information provided by a digital platform and the individual, HMRC could have grounds to launch a tax enquiry. 

The government will introduce these changes in a move to ensure gig economy workers are paying the correct amount of tax. As a result, and because HMRC will soon have a record of a freelancer’s or gig economy worker’s earnings, those working through digital platforms must make sure they report the correct income via their personal tax return annually and maintain an appropriate record of expenses.

The implementation of the rules is currently under consultation until 22nd October 2021, with the government considering whether to include the sale of goods within the scope of these changes.


What are the Model Reporting Rules for Digital Platforms?


The Model Reporting Rules for Digital Platforms is an international framework introduced by the OECD for reporting on individuals selling their services via digital marketplace platforms and sharing such information with the relevant tax authority, in order to ensure the tax compliance of freelancers and gig economy workers.

Under these rules, by January 2023 online businesses that facilitate the selling of rental property and/or personal services (with a possible extension to the sale of goods) must:

  • Collect details about individuals earning over €2,000 per year (or those who have made 30+ transactions) from the platform and verify the seller’s information

  • Report the seller’s earnings to HMRC annually by 31st January

  • Share this information with the ‘seller’ (the worker)

The information will be used by HMRC to:

  • Obtain income information from overseas platforms for UK-resident sellers

  • To detect and tackle tax non-compliance of gig economy and freelance workers

  • Share income information with the appropriate international tax authority where the seller is a resident abroad

What is the OECD?


The Organisation for Economic Co-operation and Development (OECD) is an intergovernmental organisation which establishes international standards and information-sharing for its 38 member countries, including the UK, US, Australia, and much of Europe. It has a particular focus on economic policy and tax evasion.


Who do the reporting rules apply to?


If you are providing any of the following relevant services via a digital marketplace or online platform, software, or app, the reporting rules will apply and your income will be shared directly to HMRC (or relevant tax authority) by the platform under the new rules:

  • Rental of immovable property, such as holiday accommodation and parking spaces (excludes hotels).

  • Personal services, such as food delivery, private transport hire, freelance work such as bookkeeping and graphic design, offline services such as gardening, cleaning, dance instruction and seasonal work such as events or restaurant/bar work.

If you are a digital platform operator which connects sellers providing any of the above services to buyers, you may need to report to HMRC or the relevant tax authority information regarding these sellers. These incoming changes apply to a wide range of online businesses, softwares and apps, as the policy document outlines:

“A “Platform” means any software, including a website or a part thereof and applications, including mobile applications, accessible by users and allowing Sellers to be connected to other users for the provision of Relevant Services or the sale of Goods , directly or indirectly, to such users.”

This could therefore include the likes of Uber, Deliveroo, Airbnb, Upwork, Fiverr, Freelancer.com, TaskRabbit, Bark, and many more platforms on which individuals are able to earn a self-employed income, whether full or part-time.

The rules do not encompass businesses such as recruitment agencies, directories, payment services such as PayPal or hotel booking sites. Contractors engaged by these platforms to provide services for the platforms themselves will also not be included within these rules.


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How to complete your self-assessment tax return

Simplifying the online self-assessment tax return for freelancers, contractors, and the self-employed

Whilst completing a tax return may initiate feelings of dread or stress in many, tax returns are slowly getting more and more simple. Submitting a tax return online cuts out much of the leg work, leaving only the questions that are relevant to you.

If completing your annual tax return is something you want a little more guidance on, or if this year will be your first time completing a tax return, this guide will be particularly helpful to you.

Let’s first go through the basics before a guided walkthrough of the online self-assessment tax return process.


What is a self-assessment tax return?

A self-assessment tax return (SATR) is a method of calculating and paying tax owed on income. Self-assessment tax returns are an annual responsibility completed by 31st January for the previous tax year’s income. If you are new to self-employment, you will need to have registered for self-assessment by 5th October before being able to complete your SATR.


Who needs to complete a self-assessment tax return?

You need to complete a self-assessment tax return if any of the following apply to you within the previous tax year:

  • You earned over £1,000 as a self-employed sole trader
  • You were a partner of a business partnership

You will also need to complete a SATR if HMRC have sent you a notice to complete a tax return, even if you do not owe any tax.

If it isn’t clear whether or not you need to complete a tax return, take a look at the multiple-choice questionnaire here on the .gov website for a more definitive answer.


Before you get started

If this is your first time submitting a self-assessment tax return, you will first be required to register. For more information on registering for self-assessment see here.

Before you begin filling out your tax return, you will need the following information at hand.

  • Your ten-digit Unique Taxpayer Reference (UTR) (this can be found on HMRC correspondence from when you registered for self-assessment)
  • Your National Insurance number
  • Details of any untaxed income from the previous tax year
  • Record of any already taxed income (P60)
  • Record of relevant expenses
  • Record of any contributions to a pension or to charities


How to complete your online self-assessment tax return directly with HMRC

  1. Sign into your Government Gateway account here and select the ‘Complete your tax return’ link under ‘Self Assessment’.
    Your Government Gateway account will have been set up during the registration process. This will require an access code sent to you either via text message or through a voice call.


  2. Complete the ‘Tell us about you’ section which requests basic details such as your name, date of birth, taxpayer residency status, and more.

    Use the 'File a return' menu on the right-hand side to skip and return later. You may go through these step by step and can also save your progress to return to certain sections later.


  3. ‘Tailor your return’ by answering these questions about your income and employment status. Your answers will dictate the following questions you will be asked throughout the rest of the assessment.
    From here we will just be focusing on the Self-Employed business section (SA103).


  4. Next you will need to ‘Fill in your return’. You will need to complete information about your self-employed business, your income and expenses for the tax year (or accounting period) you are completing for, as well as any additional deductions such as Coronavirus income support.


  5. Once all the relevant questions have been answered you will be invited to check your return. A red 'Error' message will display next to any sections you have not completed. Once your SATR is complete and you are happy that you have answered the questions correctly, you can press ‘Next’ to proceed.


  6. You can then view your tax calculation detailing the total amount due for the previous tax year. It also provides a breakdown of the payments due and a more detailed version of your entire tax return is available by clicking the ‘View and print your full calculation’ option.

  7. Finally, you can save a copy of your self-assessment tax return for your records and submit your return. You will be able to make payment online usually within 48 hours of submission so you will need to complete your return with sufficient time to pay if you wish to use this method.


How to complete your self-assessment tax return through GoSimpleTax

Completing a self-assessment tax return can be daunting. That’s why we provide every Qdos customer with 30% off the self-assessment tax return service with GoSimpleTax. This service is free to sign up and get started with. The premium version however includes added benefits such as direct filing with HMRC.

The tool automatically calculates the amount of tax owed and can be completed throughout the year, meaning you can keep track of income and expenses throughout the year and when January comes, all you need to do is submit to HMRC and pay your tax bill!

Another important element of the service provided by GoSimpleTax is that it highlights any mistakes made as well as if you are entitled to any savings.

  1. As you are welcomed to GoSimpleTax, you will be asked to select any sources of income you receive such as self-employment, employment, pensions, and more. This will determine the sections of the SATR you need to complete.
    You can add sections at any time from your dashboard by selecting ‘New Page’. When completing your next year’s SATR, the system will automatically apply the same options unless you select otherwise.


  2. From your dashboard, you will need to complete your ‘Personal Details’ via the button provided, as well as your business details via the ‘Edit’ button next to the title of the page you are viewing (Example: Self-employed (SA103).
    Here you will input details such as your name, date of birth, and unique tax reference, and details about your business necessary for submitting to HMRC.

  3. You are now ready to add ‘Income’ and ‘Expenses’ which you can either at one time (much like with HMRC), or throughout the year.
    Using the handy mobile app, you can even do this on the go and add pictures of your receipts for your records. With GoSimpleTax you can record your income in real time, ensuring the countdown to the self-assessment tax return deadline is stress-free. Alternatively, integrate with your favourite bookkeeping tools including FreeAgent, FreshBooks, QuickBooks, SumUp, and Xero (beta) and leave the hard work to them.


  4. Once this is complete, with the premium version of GoSimpleTax’s tool, you can view a report which gives you details of the tax and NICs you will need to pay. Finish by clicking the ‘Validate your tax return’ button. Along the top is a section that keeps track of the progress of your tax return and the deadline for submitting.
    If submitting directly to HMRC through the GoSimpleTax tool, HMRC will confirm receipt of your self-assessment via email.

Not a Qdos customer but still wish to use the service? Click here to sign up.


More information about Self-Assessment Tax Returns

For more information on self-assessment tax returns and which taxes are applicable to you, download our free Starter Guide to Tax for the Self Employed.

Please note that Qdos will receive a nominal referral fee from GoSimpleTax for registrations made via public links on the Qdos website, including those provided in this article. Qdos customers should sign up via links provided in customer accounts and/or in email communications to claim the 30% discount available with your policies (Qdos does not receive a commission for these discounted purchases).

By:Alice Hickling


What do the rules mean for freelancers and gig economy workers?


The government want to make sure that the rise in the digital economy does not result in a tax loss to the Treasury. It is clearly stated in the consultation that the information will be used “to ensure that sellers are complying with their tax obligations and to tackle non-compliance if they are not”.

This increases the risk of a tax enquiry for freelancers and gig economy workers, particularly if information provided by a digital platform differs from that submitted by the individual.


How can individuals manage these changes?


Because digital platforms will begin sharing the income of ‘sellers’ to HMRC, it’s crucial that the individual also ensures the correct amount is reported via their self-assessment tax return.

It is important to note that the platform is required to provide you with the same information that will be reported to the tax office.

Additionally, given the risk of a tax enquiry is increased, freelancers and gig economy workers are encouraged to protect themselves with Tax Enquiry Insurance to mitigate these risks.

Freelancers and gig economy workers using digital platforms should:

  1. Maintain adequate records of earnings and expenses
  2. Distinguish between earnings obtained through digital platforms and via other means

  3. Protect against a HMRC enquiry with Tax Enquiry Insurance

  4. Ensure the correct tax is paid on time to HMRC via self-assessment


What is Tax Enquiry Insurance?

Tax Enquiry Insurance provides individuals with expert defence should HMRC launch any range of enquiries. With this policy, an experienced Qdos tax consultant will handle all correspondence from HMRC throughout the duration of the enquiry. This offers policyholders reassurance that a trusted specialist with a proven track record is representing them. 

Irrespective of whether a person is operating with tax compliance, HMRC can open a tax enquiry at any given time, which can be time-consuming, stressful and potentially very costly if  not handled correctly. Qdos’ Tax Enquiry Insurance protection covers the cost of defence and support needed to manage the enquiry appropriately.



What do the rules mean for digital platforms?


Digital platform operators may face penalties for not complying with the reporting rules as required. This penalty regime is yet to be defined, however, will likely be based upon the due diligence taken to comply with the rules, and the timeliness and accuracy of reporting.


What do you need to do as a digital platform operator?


By January 2023, digital platform operators which connect sellers of relevant services to users, should:

  1. Identify all relevant and excluded sellers, ensuring a mechanism for ongoing checks for new sellers using the platform.
  2. Collect and verify information from relevant sellers including:
    1. Name
    2. Address
    3. Unique Taxpayer Reference (UTR) or National Insurance number*
    4. Date of birth or company registration number if applicable
  3. Determine the jurisdiction of residence for each relevant seller (based on the home or registered office address provided).
  4. Maintain adequate records of above information and checks made.

From January 2023, operators will need to:

  1. Complete the above for any new relevant sellers and maintain a record of changes (e.g. change of address/jurisdiction).
  2. Report relevant sellers’ information including earnings, payment account information, any deducted charges/fees, and further information if the service is for the rental of properties to HMRC by 31st January each year. HMRC will likely provide an online service for submitting this information.

*HMRC are consulting on the most relevant taxpayer identification number (TIN) to use for the reporting rules and so is subject to change.




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Why Qdos?


Qdos Contractor are one of the leading providers of specialist contractor insurance services in the UK. Our online application process takes only a matter of minutes with all documentation issued instantly. Unlike many other brokers, we don’t hide our premiums until you've provided your details, as we are confident that our premiums, service and product are the best in the market. In addition, Qdos Contractor is one of the leading authorities on the IR35 legislation and have handled well over 1,500 IR35 enquiries on behalf of UK contractors.


Our History


Qdos began in 1988 as a tax consultancy business and has grown significantly over the past two decades, providing expert business services, products and advice. Over the years, Qdos has grown in both size and reputation as a trusted contractor insurance broker as well as an expert tax advisor. Our aim is to provide UK contractors with the assistance and service with IR35 issues they need as well as sustaining excellent quality and competitive premiums in the contractor insurance market.

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