IEIM902210 - Who has to Carry out Due Diligence?

The obligation to carry out due diligence applies to all Reporting Platform Operators (RPOs). Regulation 3(1) requires RPOs to set up and implement procedures to

  • collect information about Sellers and property listings,
  • verify that information, and
  • identify Reportable Sellers.

Regulation 3(2) states that an RPO must carry out the due diligence procedures in section II of the model rules to comply with the obligation in regulation 3(1).

Where there are multiple RPOs in relation to a single Platform, all the RPOs have a responsibility to ensure that the necessary processes are in place to ensure that the required information is collected, and the due diligence procedures are carried out.

In practice, HMRC will not object where RPOs decide amongst themselves that a particular RPO will take responsibility for ensuring that the processes are in place to carry out due diligence and collect the information. However, all RPOs may be liable to a penalty if the due diligence requirements are not met, unless the RPO has a reasonable excuse.

An RPO can rely on a third party to carry out, wholly or partly, the required due diligence procedures (see 902540). However, the legal responsibility to meet the due diligence obligations rests with the RPO. Where a third party fails to adequately carry out the due diligence requirements, it will be the RPO that is subject to a penalty. HMRC will not accept the reliance on a third party as a reasonable excuse for the failure to carry out due diligence procedures properly. This is confirmed by regulation 16(2)(b).