Tax issues facing new online businesses on digital platforms

Over the past few years there has been a significant increase in customers buying goods and services via digital platforms and this has accelerated during the pandemic. Many individuals have taken this time to develop new online businesses and in doing so may not always have considered the tax consequences.

The problem arose as many of the digital platforms are based overseas so creating problems both for the platforms and the tax authorities in collating information relating to sellers and the income that they have received.

The Organisation for Economic Co-operation and Development (OECD) therefore worked to develop model rules with respect to digital platforms used by sellers and their customers to ensure that there was consistency in the information requested from the digital platforms avoidance of duplication and some carve-outs where the risk is low.

The UK has recently completed a period of consultation...