Reporting under DAC 6 required for “limited time” as HMRC transitions to international disclosure rules

HM Revenue & Customs (HMRC) has confirmed that the UK will replace the European Union cross-border tax arrangement rules “as soon as practicable”, but some aspects will continue to be enforced for a “limited time”.

In an update to agents, the regulator said it will consult on and implement the Organisation for Economic Co-operation and Development’s (OECD) mandatory disclosure rules as the UK transitions to international laws.

The announcement means that businesses will be required to continue to partially report under European disclosure laws, known as DAC 6 (Directive 2018/822).

Introduced last year, DAC 6 is an EU-wide mandatory disclosure regime that imposes mandatory reporting of cross-border tax arrangements. Reporting is required by law when at least one EU business is involved in an arrangement that falls into one of several categories, known as “hallmarks”.

According to HMRC, taxpayers and their advisers will still be required to report arrangements that meet hallmarks under “category D” for a “limited time”. These include:

• arrangements which may have the effect of undermining reporting obligations concerning the automatic exchange of information; and
• arrangements which obscure beneficial ownership.

Commenting on the report, HMRC said: “Following the end of the EU transition period the UK will move to global tax standards rather than EU ones (like DAC 6).

“Reporting under DAC 6 will still be required for a limited time until mandatory disclosure rules are implemented. However, reporting will only be required for arrangements which meet hallmarks under category D. This is in line with the Free Trade Agreement with the EU.”

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