How taxi drivers can comply with new HMRC reporting rules for digital taxi and PHV booking platforms

Digital platforms, such as taxi and gig-economy apps and websites that facilitate the provision of services or the sale of goods, have become an integral part of the modern economy. However, they also pose challenges for tax authorities, as they enable sellers to generate income from different jurisdictions without necessarily reporting it.

To ensure a fair and consistent taxation of income from digital platforms, the UK Government has introduced new reporting rules for digital platforms, based on the OECD model rules. These rules require digital platforms such as the likes of Uber, FREENOW, Bolt and Gett to report information about the income of sellers on their platform to HMRC, and also to the sellers themselves. HMRC will then exchange the information with other participating tax authorities where the sellers are tax resident.

The new rules will come into effect on 1 January 2024, with the first reporting due by 31 January 2025 for the 2024 calendar year. The rules will apply to all UK-resident platforms that facilitate the provision of services and the sale of goods, and to non-UK platforms that have a UK permanent establishment or are registered for UK VAT. The rules will not cover the rental of transport, such as car-sharing or bike-sharing platforms. The rules will also exclude sellers that only sell a few goods occasionally, such as on online marketplaces.

The new rules aim to help taxpayers get their tax right first time, and to detect and tackle tax evasion when they do not. However, they also impose new obligations and responsibilities on both platforms and sellers. Here are some of the best practices and tips for digital platform sellers, which includes taxi drivers selling their services, to comply with the reporting rules for digital platforms.

Keep track of your income: The reporting rules require platforms to report your income from selling goods or providing services on their platform to HMRC, and also to you. You should keep track of your income from different platforms and sources, and compare it with the information you receive from the platforms. You should also keep records of your expenses and deductions related to your income, such as fees, commissions, or costs.

Report your income: The reporting rules do not change your tax obligations, but they make it easier for you to comply with them. You should report your income from digital platforms on your tax return, and pay any tax due on it. You should also report your income to the tax authorities of any other jurisdictions where you are tax resident, and claim any relief or credit for any double taxation. You should use the information provided by the platforms to help you report your income accurately and consistently.

Check your tax position: The reporting rules may affect your tax position, depending on your country of residence and other factors. You should check your tax position and see if you need to register for any taxes, such as income tax, VAT, or corporation tax. You should also see if you qualify for any exemptions, allowances, or reliefs. You should use online tools or calculators to check your tax position, or consult a tax advisor or software provider for assistance.

Update your information: The reporting rules require platforms to collect and verify your information, such as your name, address, tax identification number and country of residence. You should provide accurate and complete information to the platforms, and update it whenever there are any changes or corrections. You should also respond to any requests or queries from the platforms or the tax authorities, and provide any additional information or evidence they may need.

Be honest: The reporting rules are designed to improve transparency and compliance in the digital economy, and to prevent tax evasion. You should be honest and accurate in reporting your income from digital platforms, and not omit, falsify, or manipulate the data. You should also cooperate with HMRC and other tax authorities, and pay any tax due on your income. You should be aware of the penalties for non-compliance, which can range from fixed amounts to a percentage of the income involved.