What is DAC7? UK Digital Platform Reporting Rules (2026/27)

With millions of individuals generating income through online platforms, global tax authorities have cracked down on the gig and sharing economies. If you are asking, what is DAC7?, you must understand both the European directive and its direct UK equivalent that currently governs online sales and services.

DAC7 is a European Union directive (which took effect on 1 January 2023) that legally requires digital platform operators to report information about their sellers to tax authorities.  To maintain international parity, the UK implemented its own equivalent reporting rules starting from 1 January 2024.

Enabled by section 349 of the Finance (No.2) Act 2023, the government enacted these rules through The Platform Operators (Due Diligence and Reporting Requirements) Regulations 2023.  HMRC designed this regime to identify non-compliant taxpayers and combat tax evasion by giving the tax authority the same visibility over digital platform income as it has over traditional businesses.

Who Falls Under the Scope?

The UK reporting rules apply to digital platforms—such as apps and websites—that facilitate specific activities for consideration. Platforms fall into scope if they facilitate:

• The sale of goods.
• The provision of personal services (such as freelance work, taxi driving, or food delivery).
• The rental of short-term accommodation or immovable property.
• The rental of any means of transport.

Under these rules, UK platform operators with sellers resident in an EU partner jurisdiction must report that seller’s data to HMRC, which HMRC then automatically exchanges with the relevant EU member state.  Crucially, following technical amendments that took effect in November 2024, if there is a UK platform operator, they must report UK seller information directly to HMRC rather than relying on another jurisdiction to exchange the data back to the UK.

Excluded Sellers: Who is Exempt?

Not every seller triggers a reporting obligation. The rules specifically exclude low-risk or casual sellers to minimise administrative burdens. Platforms do not have to report a seller if they meet the “de minimis” test for casual goods sales. Both of the following conditions must apply for the exclusion to hold:

1. The platform facilitated fewer than 30 sales of goods for the seller during the reportable calendar year.
2. The total consideration paid or credited to the seller did not exceed €2,000 during the reportable period.

The rules also exclude large-scale commercial hotel providers (defined as entities for which the platform facilitated more than 2,000 property rentals in a year), government entities, and publicly listed entities whose stock regularly trades on an established securities market.

What Data Must Platforms Report?

If a seller qualifies as reportable, the platform operator must extract specific financial and identifying data. The format is not strictly prescribed, but the platform must provide HMRC and the seller with:

• The seller’s identification details.
• The total consideration received, broken down on a quarterly basis.
• Details of the relevant activities the seller performed.
• Any fees, taxes, or commissions the platform withheld.

Importantly, these reporting rules do not create any new tax liabilities for the sellers.  A seller earning small amounts may still utilise their £1,000 Trading Allowance or Property Allowance to completely exempt this income from UK income tax, even if the platform reports the earnings to HMRC.

2026/27 Compliance Deadlines

Platform operators face strict annual deadlines to complete their due diligence and file their reports. The reporting period aligns with the calendar year.

• Due Diligence (31 December): Platforms must complete their seller due diligence procedures by 31 December of the reportable period.  Platforms can officially elect to carry out due diligence exclusively on “Active Sellers” (those actively carrying out activities for consideration), but they must notify HMRC of this election by 31 January.
• HMRC Reporting (31 January): The platform operator must submit the compiled data to HMRC no later than 31 January following the end of the reportable calendar year.
• Seller Statements (31 January): By the exact same 31 January deadline, the platform must provide a copy of the reported information directly to the seller.  This ensures the seller has the exact figures HMRC possesses when they prepare their Self Assessment tax return.

Penalties for Non-Compliance

HMRC aggressively enforces these rules through a dual-penalty system targeting platform operators.

If a platform fails to submit its report to HMRC by the 31 January deadline, HMRC will issue an initial penalty assessment of up to £5,000.  If the failure continues after HMRC issues the notice, the platform faces daily penalties of up to £600 per day until they submit the report.

Similarly, if the platform fails to provide the required statement to the sellers by the deadline, a separate penalty of up to £5,000 applies per reportable period, again followed by potential daily penalties of up to £600.  HMRC may reduce the initial £5,000 penalty for a first-time failure, but subsequent failures will attract higher penalty levels.

Summary Table: UK Platform Reporting Rules (DAC7 Equivalent)

Next steps for advisors: Review your platform clients to ensure their onboarding systems adequately capture the necessary due diligence data before 31 December, and remind self-employed clients that their platform income will be fully visible to HMRC ahead of their Self Assessment filings.