DAC 6 update welcomed
It is good to see some positive news this year for UK-based intermediaries.
Following the signing of a new free trade deal with the EU by Prime Minster Boris Johnson the EU directive DAC 6 ceased to apply in the UK from 11pm on the 31 December 2020.
In my previous article published in October 2019 I wrote about how DAC 6 was born out of the OECD's Base Erosion and Profit Shifting framework (BEPS) which looked at tax transparency of cross border transactions the type of arrangements which could be reportable and how some of those reporting duties would fall on UK intermediaries or in some cases the tax payer themselves.
HMRC confirmed the reporting under DAC 6 will still be required for a limited time but only for arrangements which meet hallmarks under category D in line with the UK's obligations under the Free Trade Agreement with the EU.
HMRC has also confirmed that in the coming year the UK will consult on and implement the OECD's Mandatory Disclosure Rules (MDR) as soon as practicable to replace DAC 6 and transition from European to international rules.
The Government has amended the regulations to ensure the rules work correctly after the end of the transition period including ensuring that references to EU member States refer to the UK or an EU member state after the end of the transition period.
The regulations have now been laid before Parliament and are available here. These changes came into effect from 31 December 2020.
In the coming year the Government will repeal the legislation implementing DAC 6 in the UK and implement the OECD's MDR as soon as practicable in order to transition to international rather than EU standards on tax transparency.
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