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HMRC confirms ALL taxi and PHV operators using software are included in new ‘Digital Platform’ driver reporting rules
HM Revenue and Customs (HMRC) has revealed all private hire and taxi operators that offer any of their services via a digital platform, however big or small, are obligated to gather, verify, and disclose driver information and income.
Starting 1 January 2024, these digital platforms, encompassing websites, mobile applications, and any form of software facilitating online transactions, are required to record seller activities annually. The details must then be reported to HMRC by 31 January of the following year as part of new ‘Reporting Rules for Digital Platforms’.
This directive is part of HMRC's broader strategy to tighten the noose on tax evasion and ensure a level playing field between online sellers and traditional businesses. TaxiPoint approached HMRC after confusion arose in the industry over whether all taxi and private hire industry operators using software fall into the ‘gig economy’ digital platform legislation.
The definition of a platform under the new guidelines is broad, capturing any digital medium that connects sellers (in this instance, the driver) with customers for the provision of services or sale of goods. This includes platforms that are directly or indirectly involved in transactions and know the amount paid to sellers for their services or goods. The criteria is set to encompass a wide range of digital business models, leaving little room for companies to sidestep these obligations.
Companies utilising digital platforms for business operations are now urged by HMRC to assess whether their software aligns with the criteria. This is particularly relevant for platforms that facilitate direct interactions between service providers like drivers and their customers. According to HMRC, there will be no exemptions, even for smaller platforms, highlighting the inclusive approach the Government agency is taking.
HMRC has also released guidance for digital platform operators to help them determine their responsibilities under the new regulations. A HMRC spokesperson said: “Digital platforms are required to share information with us to ensure businesses operating via these platforms pay the correct amount of tax, and do not have an unfair tax advantage over high street and other traditional businesses.”
This move is seen as a step towards modernising the tax system to keep pace with the evolving digital economy and ensuring that all businesses contribute their fair share to the public coffers.
SO, IS MY TAXI OR PRIVATE HIRE VEHICLE DISPATCH BOOKING SYSTEM INCLUDED IN THE NEW RULES?
Under the new rules, HMRC have confirmed that a platform is defined as: “Any software, including a website or 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.”
Key to the definition is that software will qualify as a platform if:
It is accessible by users and allows Sellers (i.e. drivers) to be connected to other users (customers), and
It facilitates the provision of goods or services by Sellers (drivers) to their customers, and
The amount of payment made to the Seller (drivers) for the provision of goods or services is known or reasonably knowable by the Platform Operator.
Operators should consider, for example, if drivers register on the software and if customers are able to access the software to book a driver. If all the above criteria are met, then software would likely be in scope of the
rules. If not, then it is unlikely it will be in scope. There is no exemption for smaller platforms.
