The Office of Tax Simplification (OTS) has suggested that online platforms like Uber automatically deduct tax from their workers’ earnings. This will help to simplify the taxation process.

OTS – an independent advisor to HMRC – has made the recommendation in a new report, Platforms, the Platform economy and Tax Simplification. 

Should platforms take responsibility?

In the paper, it makes a number of suggestions. The main one being that online platforms could operate a system equivalent to Pay As You Earn (PAYE). This would involve deducting tax from earnings and thereby taking responsibility for fulfilling the tax obligations of their workers.

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According to OTS, its aim is to suggest how self-employed workers can be provided with as simple an experience as employees in relation to their tax affairs. Its purpose is not to comment on the borderline between employment and self-employment in terms of employment rights. Further, it will not comment on the status of ‘workers’ who are treated as self-employed individuals for tax purposes.

OTS’s paper concludes that:

  • HMRC continue to focus on the development of guidance for people who may unknowingly generate tax liabilities
  • The government should consider the case for enabling online platforms such as taxi or delivery firms to operate a system equivalent to PAYE for workers (without affecting their employment status)
  • HMRC engage fully with technology developers to provide reassurance to the burgeoning self-employed that digital applications are fit for purpose in submitting accurate tax data and returns
  • HMRC, as a result, should consider developing an app for the self-employed to help them manage their tax affairs.

“More generally, OTS strongly supports the continuing efforts of HMRC to improve their guidance,” Paul Morton, OTS tax director, said. “On new technology, we believe HMRC has a critical role in ensuring software applications designed for the self-employed to manage their tax affairs are fit for purpose. They also should consider establishing a digital tax app to simplify how people interact with them.”

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