DST42000 - DST Accounting Periods

DST operates by reference to accounting periods (APs). Groups will calculate their revenues from digital services activities in the accounting period.

  • If these revenues exceed the revenue thresholds, then the group will be in scope
  • DST will then be charged on the UK digital services revenues in the accounting period

The rules that determine the accounting period for DST are designed to ensure the accounting period is normally aligned with the period of account covered by the consolidated financial statements of the group. This will usually be the period of account of the ultimate parent company of the group.

The DST rules restrict the maximum length of the DST accounting period to 12 months, so there could exceptionally be a difference between the DST AP and period of account in the consolidated financial statements.

First accounting period

The first accounting period begins on 1 April 2020, from when DST may become chargeable.

It ends on the accounting reference date, which is the date to which the group makes up its accounts. This will be the balance sheet date of the consolidated financial statements.

However, if there is no accounting reference date in the 2020/21 financial year (i.e. between 1 April 2020 and 31 March 2021) then the accounting period will end on 31 March 2021. This is to ensure all groups (existing on 1 April 2020) have an accounting period end within 12 months.

The next accounting period begins immediately after the end of the first accounting period and continues until the next accounting reference date or 12 months from the start of that AP, whichever comes earlier.

It is worth noting all groups will have a DST accounting period, even if they do not provide taxable digital services activities or generate any revenues from UK users. This is because the rules need to set a period for the group to then test whether it meets the threshold conditions. It is only when the threshold conditions are met the group becomes chargeable to DST and is obliged to register or submit returns.

Groups formed after 1 April 2020

If the group only comes into existence after the 1 April 2020, the first accounting period will begin on the date that the group was formed. It will end on the accounting reference date.