The HM Revenue and Customs (HMRC) has recently updated its digital platform reporting rules for online sellers, and it’s important for those who sell online to understand what these changes mean for them.
The new rules require online sellers to report their income and expenses through a digital platform, such as a website, app, or marketplace, if they meet certain criteria. This is aimed at cracking down on tax evasion and ensuring that all online sellers are paying the correct amount of tax on their earnings.
One of the key changes to the rules is that online sellers who meet the criteria must now keep digital records of all their sales and expenses. This means that they will need to use accounting software or an app to record their income and expenses, rather than relying on paper records or manual spreadsheets. This digital record-keeping requirement is designed to make it easier for HMRC to monitor and audit online sellers’ tax affairs.
In addition to keeping digital records, online sellers who meet the criteria will also be required to submit quarterly updates to HMRC through their digital platform. These updates will need to include details of their income and expenses, and will need to be submitted using HMRC-approved software.
The new reporting rules apply to online sellers who meet the following criteria:
– Their annual turnover from online sales exceeds £10,000
– More than 200 transactions are made in a year
– They have been trading for more than one year
If an online seller meets any of these criteria, they will need to comply with the new reporting rules. Failure to do so could result in penalties from HMRC.
It’s important for online sellers to be aware of these changes and to ensure that they are keeping accurate digital records of their sales and expenses. This may require them to invest in accounting software or app, if they have not already done so.
Overall, the new HMRC digital platform reporting rules are designed to ensure that online sellers are paying the correct amount of tax on their earnings. While it may require some extra effort and investment on the part of online sellers, compliance with these rules is essential to avoid penalties from HMRC.