UK Transition Mandatory Disclosure Rules and DAC 6

Source: HMRC

The DAC 6 reporting regime requires taxpayers and their advisers to disclose information on certain types of cross-border arrangements to HMRC. Following the end of the EU transition period the UK will move to global tax standards rather than EU ones (like DAC 6).

As part of that move to global tax standards, the government has made changes to the DAC 6 regime, following the end of the EU Transition Period:

·         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 EU to international rules.

·         reporting under DAC 6 will still be required for a limited time until MDR is 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.

You can find out more details about the hallmarks, and the reporting regime in HMRC’s International Exchange of Information Manual.

Legislation to amend the scope of the DAC 6 regime came into force on 31 December 2020. The changes mean that only arrangements which meet category D hallmarks have to be reported. This applies regardless of when the arrangement became reportable.

In the coming year, the government will repeal the legislation implementing DAC 6 in the UK and implement the OECD’s MDR. The government will consult on draft legislation to introduce MDR in due course.

If you need to report an arrangement to HMRC under these rules you can do so by accessing the portal.

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