Law Society critical of MDR regime look-back period

The Law Society has responded to HMRC’s consultation on the draft mandatory disclosure regulations. The draft International Tax Enforcement (Disclosable Arrangements) Regulations 2022 will implement the OECD’s model mandatory disclosure rules for common reporting standard avoidance arrangements and opaque offshore structures. The rules require taxpayers and intermediaries to disclose information on these types of arrangements to HMRC and replace the DAC 6 rules.

The Law Society’s key point is in relation to the requirement to report pre-existing arrangements back to 2014. This backward-looking review would be costly and practically difficult, and it questions whether it is necessary and proportionate. The CIOT has also made the same point on the look-back period (as reported in last week’s Tax Journal).

The Law Society also makes several other representations about the detailed design of the rules, to try to make these easier for members to implement in practice, including in relation to how the rules interact with legal professional privilege.