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UK to replace DAC 6 with OECD mandatory disclosure rules

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The CIOT has published a letter from HMRC setting out the government’s intention to repeal the disclosable cross-border arrangements rules, which implement DAC 6 in the UK, and replace them with new legislation to implement the OECD mandatory disclosure rules (MDR). This follows the enactment of amending regulations which took effect from 31 December 2020, and which effectively repealed most of DAC 6 in the UK from that date, by removing all the hallmarks other than those in category D (on automatic exchange of information and beneficial ownership).

The International Tax Enforcement (Disclosable Arrangements) Regulations, SI 2020/25, implement EU Directive 2018/822, also known as DAC 6. DAC 6 requires ‘intermediaries’ to report information to HMRC about cross-border arrangements that contain certain hallmarks. The earliest date on which reports are due to be made in the UK under DAC 6 is 30 January 2021.

The International Tax Enforcement (Disclosable Arrangements) (Amendment) (No. 2) (EU Exit) Regulations, SI 2020/1649, took effect from 11pm UK time on 31 December 2020 and significantly reduced the scope of the arrangements that need to be reported in the UK under DAC 6, by effectively removing all the hallmarks other than those in category D.

In its letter, HMRC confirms that this means that arrangements need to be reported under the UK’s disclosable arrangements rules only if they fall within category D. The new Trade and Cooperation Agreement between the UK and EU requires the UK to abide by OECD rules on exchange of information on cross-border arrangements, and category D is being retained as it enables the UK to comply with the OECD MDR.

HMRC further states that this more restricted reporting requirement will only apply for a limited period, as it intends to repeal SI 2020/25 entirely, and replace it with new legislation specifically to implement the OECD MDR. HMRC will consult on the new legislation later in 2021.

Issue: 1514
Categories: News