IEIM901640 - Related Entity Sellers

As previously stated (see 901120), a website, app or other software that exclusively facilitates the Relevant Activities of that business is not a Platform because it does not connect third party Sellers to users. Where the website, app or other software is also available for use by non-related, third-party Sellers, then the software would fall within the definition of a Platform.

However, even where this is the case, a Platform Operator (PO) that sells its own goods or services on its Platform is not a Seller on that Platform as it has not registered on a Platform for the purposes of being connected to users for the sale of those goods or provision of those services. Therefore, a single entity cannot be both a PO and a Seller in respect of the same Platform.

An entity related to a PO, however, can be a Seller on a Platform made available by that PO, as confirmed in the OECD FAQs. Whether or not in practice the related entity meets the definition to be a Seller will depend on the facts and circumstances.

Generally, HMRC would consider that related entities are unlikely to be ‘Sellers’ within the meaning of these regulations, because they would not normally ‘register’ on the Platform as a Seller.

For example, XYZ plc is the parent company of a retail group. It runs and maintains the group’s website. Products from XYZ group are available for purchase, but XYZ plc also allows non-related third-party entities to sell goods via the website too. The website is therefore a Platform for the purpose of these regulations. The goods sold by XYZ group on the website are actually owned by a subsidiary, W Ltd, and website users contract with W Ltd for the purchase of XYZ goods. W Ltd is not registered on the Platform for the provision of the sale of goods. In this case, HMRC would not normally expect W Ltd to be considered a ‘Seller’ because it is not ‘registered’ on the Platform as a Seller within the meaning of these rules, in the way that other non-related third-party Sellers would be registered on the Platform.

Other, non-related individuals or entities that are registered on the Platform as Sellers to sell goods via the XYZ website would be reportable. Any Related-Entity Sellers would only be reportable if they were ‘registered’ on the Platform in the same way as other Sellers.

The same principle can be applied to the provision of services as to the sale of goods.