Tax Information and Responsibilities

Last Updated: 15 September 2025

1. COMPANY INFORMATION

Company Name: DIGIFABRICA LTD
Company Number: 15390190
Registered Office: 71-75 Shelton Street, Covent Garden, London, United Kingdom, WC2H 9JQ
Email: info@bittenpay.com
Director: Ümit Sönmez
VAT Status: Not VAT registered

2. INTRODUCTION

This Tax Information and Responsibilities document outlines the tax obligations, responsibilities, and information requirements for all participants in the DIGIFABRICA digital marketplace platform. This document provides guidance on UK and international tax compliance for vendors, affiliates, and customers.

3. PLATFORM TAX STATUS

3.1 DIGIFABRICA Tax Information

Company Tax Status:

UK Corporation Tax registered company
Not currently VAT registered (below £85,000 threshold)
Will register for VAT when legally required
Compliant with all UK tax obligations

Business Classification:

Digital marketplace platform operator
Commission-based revenue model
Business-to-business and business-to-consumer transactions
International digital services provider

3.2 VAT Registration Threshold

Current Status:

Annual turnover below VAT registration threshold (£85,000)
No VAT charges on platform services currently
Monitoring turnover for future VAT registration requirements
Will notify users of any VAT registration changes

Future VAT Registration:

Automatic registration when threshold exceeded
30-day registration requirement after threshold breach
VAT charges will apply to platform commission fees
Clear communication of any VAT implementation

4. VENDOR TAX RESPONSIBILITIES

4.1 Income Tax Obligations

UK Vendors:

Must report all platform earnings to HMRC
Income tax payable on net profits from digital sales
Self-assessment tax return filing required
National Insurance contributions may apply

International Vendors:

Responsible for tax compliance in country of residence
May be subject to UK tax obligations for UK-sourced income
Tax treaty benefits may apply where available
Professional tax advice recommended

4.2 VAT Obligations for Vendors

UK VAT Registration:

Required if annual turnover exceeds £85,000
Voluntary registration available below threshold
VAT charges on digital products where applicable
EU and international VAT considerations

Digital Services VAT:

EU customers: EU VAT may apply based on customer location
OSS (One-Stop Shop) registration available for EU sales
IOSS for low-value imports where applicable
Country-specific digital services tax requirements

4.3 Business Registration Requirements

UK Vendors:

Sole trader registration with HMRC
Limited company incorporation where appropriate
Business bank account requirements
Professional indemnity insurance considerations

Record Keeping for Vendors:

Detailed sales and commission records
Platform statements and payment confirmations
Business expense documentation
Customer transaction details
VAT records (if VAT registered)

4.4 Deductible Business Expenses

Allowable Deductions:

Platform commission fees paid to DIGIFABRICA
Marketing and advertising expenses
Product development and creation costs
Professional services (legal, accounting, tax advice)
Technology and software costs

Non-Deductible Expenses:

Personal expenses unrelated to business
Capital expenditure (subject to capital allowances)
Entertainment expenses (with limited exceptions)
Fines and penalties

5. AFFILIATE TAX RESPONSIBILITIES

5.1 Commission Income Taxation

UK Affiliates:

All commission income subject to income tax
Self-employment tax obligations
National Insurance Class 2 and Class 4 contributions
Self-assessment tax return filing required

International Affiliates:

Commission income may be subject to UK tax
Withholding tax considerations
Tax treaty benefits where applicable
Local country tax obligations

5.2 Business vs. Hobby Classification

Business Classification Factors:

Regularity and frequency of affiliate activities
Profit motive and commercial intent
Time and effort devoted to activities
Professional manner of operations
Separate business bank account maintenance

Tax Implications:

Business classification: Full business deductions available
Hobby classification: Limited deduction opportunities
VAT registration requirements if business turnover exceeds threshold

5.3 Affiliate Expense Deductions

Deductible Business Expenses:

Marketing and advertising costs
Website development and maintenance
Professional training and education
Business travel and transportation
Office expenses and equipment

Documentation Requirements:

Detailed expense records and receipts
Business purpose documentation
Separate business and personal expenses
VAT receipts for VAT-registered affiliates

6. CUSTOMER TAX CONSIDERATIONS

6.1 Business Customers

VAT Treatment:

Business purchases may qualify for VAT deduction (if customer VAT registered)
Input VAT recovery on business-related digital purchases
Proper VAT invoicing and documentation required

Corporation Tax Deductions:

Business software and digital tools
Training and educational materials
Marketing and advertising content
Professional development resources

6.2 Individual Customers

Personal Tax Implications:

Generally no tax deductions for personal digital purchases
Educational materials may qualify for limited reliefs
Business use of personal purchases may allow partial deductions

7. INTERNATIONAL TAX COMPLIANCE

7.1 Cross-Border Tax Issues

UK-EU Transactions:

Post-Brexit VAT rules application
EU OSS registration for EU customer sales
Import VAT considerations
Digital services tax implications

Global Tax Considerations:

US tax obligations for US-connected persons
OECD Common Reporting Standards compliance
Transfer pricing considerations for related party transactions
Country-specific digital services taxes

7.2 Tax Treaty Benefits

Available Treaties:

UK double taxation agreements with various countries
Reduced withholding tax rates where applicable
Elimination of double taxation
Professional advice required for treaty claims

Treaty Claim Procedures:

Proper documentation and certification
Advance treaty claim submissions
Ongoing compliance monitoring
Professional tax advisor consultation

8. PLATFORM TAX REPORTING AND DOCUMENTATION

8.1 Tax Documentation Provided

Vendor Documentation:

Monthly commission statements
Annual earnings summaries
Platform fee documentation
Payment method confirmations

Affiliate Documentation:

Monthly commission statements
Annual commission summaries
Payment confirmations and records
Performance and earnings reports

8.2 Tax Information Requests

Information Collection:

Tax identification numbers (where required)
Business registration details
VAT registration numbers
Beneficial ownership information

Compliance Reporting:

Annual reporting to HMRC (where required)
International information exchange compliance
CRS (Common Reporting Standards) reporting
Country-by-country reporting (where applicable)

9. RECORD KEEPING REQUIREMENTS

9.1 Mandatory Record Retention

UK Legal Requirements:

Business records: 6 years from end of accounting period
VAT records: 6 years (if VAT registered)
PAYE records: 3 years after end of tax year
Corporation tax records: 6 years from end of accounting period

Digital Records:

Electronic records acceptable for tax purposes
Making Tax Digital (MTD) compliance
Backup and security requirements
Regular data integrity checks

9.2 Recommended Record Keeping

Best Practices:

Real-time transaction recording
Monthly reconciliation procedures
Annual compliance reviews
Professional advisor consultation
Cloud-based backup systems

Essential Documents:

All platform statements and confirmations
Bank statements and payment records
Business expense receipts and invoices
Contract and agreement documentation
Tax return copies and supporting schedules

10. VAT COMPLIANCE FOR DIGITAL SERVICES

10.1 UK VAT on Digital Services

Current Exemption:

DIGIFABRICA not currently VAT registered
No VAT charges on platform commission fees
Vendors responsible for their own VAT obligations
Monitoring for future VAT registration requirements

Future VAT Implementation:

30 days advance notice of VAT registration
VAT charges on platform services (20% standard rate)
VAT invoice provision to VAT-registered customers
Input VAT recovery available for business customers

10.2 EU and International VAT

EU Digital Services VAT:

B2C sales to EU customers may require EU VAT
OSS (One-Stop Shop) registration available
Country-specific rate application
Quarterly VAT return filing

Other International VAT:

Country-specific digital services taxes
GST/VAT obligations in various jurisdictions
Professional advice required for compliance
Regular monitoring of changing regulations

11. MAKING TAX DIGITAL (MTD) COMPLIANCE

11.1 MTD Requirements

Digital Record Keeping:

Electronic records for VAT (when registered)
Compatible software systems
Digital submission requirements
Quarterly VAT return filing online

Future MTD Extensions:

Income Tax MTD implementation planned
Corporation Tax MTD development
Enhanced digital reporting requirements
System preparation and compliance planning

11.2 Platform MTD Support

System Capabilities:

Digital record export functionality
Compatible data formats for MTD software
Real-time reporting capabilities
Integration with popular accounting systems

12. TAX AUDIT AND COMPLIANCE

12.1 HMRC Compliance Checks

Potential Audit Areas:

Platform commission income reporting
Business expense deduction claims
VAT compliance (when applicable)
International income reporting
Employment status classification

Audit Preparation:

Comprehensive record maintenance
Professional advisor representation
Prompt response to information requests
Cooperative approach with HMRC
Documentation organization and accessibility

12.2 Penalty Avoidance

Common Penalty Triggers:

Late tax return filing
Inaccurate income reporting
Inadequate record keeping
Late payment of tax liabilities
VAT registration delays

Penalty Mitigation:

Timely compliance with all obligations
Professional tax advice consultation
Regular compliance reviews
Prompt error correction and disclosure
Reasonable care standard maintenance

13. PROFESSIONAL TAX ADVICE

13.1 When to Seek Professional Help

Recommended Scenarios:

Starting business activities on platform
International tax obligations
VAT registration decisions
Complex business structures
Tax audit or compliance check

Professional Services:

Chartered accountants and tax advisors
Specialist digital economy tax experts
International tax consultants
VAT specialists
Employment status advisors

13.2 Tax Planning Opportunities

Legitimate Tax Planning:

Business structure optimization
Allowable expense maximization
VAT registration timing
International tax efficiency
Pension and retirement planning

Compliance Boundaries:

Avoidance vs. evasion distinction
HMRC General Anti-Abuse Rule (GAAR)
Disclosure of tax avoidance schemes (DOTAS)
Professional ethical standards
Reputational risk considerations

14. SEASONAL TAX CONSIDERATIONS

14.1 Key Tax Dates

Annual Deadlines:

Self-assessment tax returns: 31 January
Corporation tax returns: 12 months after accounting period end
VAT returns: Quarterly (when registered)
PAYE submissions: Monthly or quarterly

Planning Considerations:

Year-end tax planning
Expense timing optimization
Income timing strategies
VAT cash flow management
Professional advice scheduling

14.2 Quarterly Reviews

Regular Assessment:

Tax liability estimation
Cash flow planning
Compliance status review
Professional advisor consultation
System and process updates

15. CONTACT INFORMATION

15.1 Platform Tax Support

General Tax Questions:

Email: info@bittenpay.com
Subject: “Tax Information Request”
Response time: Within 48 hours

15.2 Professional Advice Disclaimer

Important Notice:

This document provides general guidance only
Professional tax advice required for specific situations
Tax laws subject to change
Individual circumstances may vary
DIGIFABRICA not a qualified tax advisor

15.3 Recommended Professional Resources

UK Tax Authorities:

HMRC: gov.uk/government/organisations/hm-revenue-customs
Tax helplines and online guidance
Making Tax Digital information

Professional Bodies:

Institute of Chartered Accountants in England and Wales (ICAEW)
Association of Chartered Certified Accountants (ACCA)
Chartered Institute of Taxation (CIOT)

16. UPDATES AND CHANGES

16.1 Tax Law Changes

Monitoring Requirements:

Regular review of tax legislation changes
Impact assessment on platform operations
User communication of significant changes
Professional advice consultation
System and process updates

16.2 Platform Tax Status Updates

Communication Process:

30 days advance notice of material changes
Clear explanation of impact on users
Updated documentation provision
Professional advice recommendations
Transition period planning

17. GOVERNING LAW

This Tax Information and Responsibilities document is based on UK tax law and regulations current as of the effective date. Tax laws are subject to change, and professional advice should be sought for specific situations.

18. DISCLAIMER

Important Legal Notice: This document provides general information only and does not constitute professional tax advice. DIGIFABRICA is not a qualified tax advisor and recommends consultation with professional tax advisors for specific tax situations and compliance requirements.