DAC7 is a directive introduced by the UK’s HMRC (His Majesty’s Revenue and Customs) to enhance tax transparency and compliance within the digital platform economy. It requires digital platforms to report the income earned by sellers using their services. The directive’s primary objective is to prevent tax evasion by ensuring all income generated through digital platforms is accurately reported and taxed. This applies to activities such as selling goods, renting properties or providing services.

DAC7 aims to establish a level playing field by ensuring digital transactions are subject to the same tax rules as traditional businesses. By enforcing this regulation, HMRC seeks to close the tax gap and promote fair taxation in the expanding digital economy.

For Bookalet users, agencies ( those who offer vacation rentals on behalf of owners ) will need to report the income they have paid to property owners. This process involves generating an XML report based on owner income, which can then be uploaded to the HMRC online gateway. We have also implemented tools to help agencies collect required information, such as National Insurance numbers, dates of birth, and cities of birth, in compliance with HMRC requirements.

If you have any questions about how DAC7 might affect your business, we recommend contacting your bookkeeper or accountant for guidance.