Reporting Overseas Trading Income | HMRC Investigations Solicitors


In a previous article ‘Side-Hustle Tax’ | HMRC Rules’, we explained new rules introduced on 1 January 2024 by HMRC requiring digital platforms involving popular apps or websites to collect and report information about seller transactions and income, which must be presented by 2025.

Since the same date, online marketplaces have also been obliged to collect and report the incomes of sellers on their platforms for income generated overseas.

As explained in our previous article, the new rules do not impose a new tax on those who derive income through digital platforms, whether as a main income or a ‘side hustle’ but a means for HMRC to become aware of potential tax liability.

Those traders who generate any such income will now have their trading activities released to HMRC, potentially resulting in the imposition of substantial penalties where tax evasion is discovered.

Naz Maqsoom of KANGS Solicitors explains the effect of the new rules on income earned abroad.

KANGS Solicitors offers extensive expertise gained from assisting clients, whether individuals or corporate, involved with tax investigations and disputes involving HMRC.

The Team at KANGS is led by founding and senior partner, Hamraj Kang, recognised as a leading expert in financial investigations and one of only two solicitors nationally to be ranked as a ‘Star Individual’ for eight consecutive years in the legal directory Chambers UK.

For an initial no-obligation discussion, please call our Team at any of our offices detailed below:

Operation of the New Rules | KANGS Tax Offences Defence Solicitors

What is the law?

The Organisation for Economic Co-operation and Development (‘OECD’) has increasingly focused on combating cross-border money laundering and tax evasion.

The new rules arise from the UK signing a Global Agreement with OECD allowing tax officials to share information with authorities in other countries.

Section 349 of the Finance (No. 2) Act 2023 introduced into UK law the OECD’s resolution to increase income-sharing between different tax authorities. This has empowered HMRC to require online marketplaces to provide information about the income of sellers using the platform.

The Act states:

The Treasury may make regulations for, or in connection with, giving effect to international tax compliance arrangements to any extent, subject to such exceptions or modifications as the Treasury consider appropriate.’

What is an ‘Online marketplace’?

An ‘online marketplace’ is any digital platform which handles and enables the sale of goods and services from individuals and/or businesses to customers. Examples of such platforms are:

  • Airbnb: accommodation providers,
  • Uber: private hire and ride hailing services,
  • eBay and Vinted: marketplaces for goods.

Who is Affected by the New Rules?

HMRC anticipates that between two to five million businesses in the UK conducting transactions through online marketplaces overseas will be affected.

The OECD rules, which now apply in the UK, do not require digital platforms to disclose the income of businesses which operate fewer than thirty transactions per year or in transactions valued as less than €2,000.

Therefore, the anticipation is that sellers who regularly transact online market place trading overseas should expect their activity to be examined by HMRC seeking out those failing to disclose their trading profits.

By way of reciprocation, the tax authorities of countries which subscribe to the OECD rules will have access to income generated in the UK by their residents.

How Can We Help? | KANGS Tax Disputes Solicitors

Reporting through the new rules begins in January 2025 which provides time to seek rectification of any anomalies in the reporting of your tax position.

Steps can be taken to inform HMRC of any underpayment or potential underpayment which has occurred with the view to removing any uncertainty and seeking to mitigate, as far as is possible, any penalties which HMRC may seek to impose.

The Team at KANGS is accustomed to negotiating with HMRC and has frequently successfully negotiated an outcome completely satisfactory to and unexpected by our client.

If HMRC uncovers a tax discrepancy which an individual or corporate business has failed to disclose, the consequences may be far more serious, especially if deliberate evasion of tax is discovered.

Who Should I Contact for Help? | KANGS HMRC Tax Investigation Solicitors

If you or your business are, or anticipate, facing any type of HMRC investigation, you should not delay seeking advice.

Our Team will support and guide you throughout the entirety of any HMRC investigation or proceedings, seeking to achieve the best available outcome as quickly and cost-effectively as possible.

Please feel free to contact us by:

Telephone: 0333 370 4333

Email: info@kangssolicitors.co.uk

We provide initial, no-obligation discussions at our three offices in London, Birmingham and Manchester.

Alternatively, discussions can be held virtually through live conferencing or telephone.

Hamraj Kang

Hamraj Kang
Senior Partner

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Tim Thompson

Tim Thompson

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Nazaqat Maqsoom

Naz Maqsoom

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