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UK to replace DAC6

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How has the Brexit agreement affected DAC6?

In light of the Brexit Fair Trade Agreement that passed through parliament on 30 December 2020, HMRC announced today that there will be major changes in the UK’s approach to DAC6.

DAC6 will cease to apply to the UK at the end of the transition period (11pm GMT on 31 December 2020). At that point, the UK will no longer be obliged to implement DAC6.

Register now for our webinar this Wednesday to discuss the changes

Does this mean that DAC6 will no longer apply in the UK?

The short answer is no. 

The long answer is that the Fair Trade Agreement emphasises that the UK “shall not weaken or reduce the level of protection provided for in its legislation at the end of the transition period below the level provided for by the standards and rules which have been agreed in the OECD at the end of the transition period”. This is a reference to the OECD’s model Mandatory Disclosure Rules (MDR) and includes some elements of DAC6.

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Upcoming webinar: Anti-bribery – Maintaining compliance

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Wednesday 3 February, 12:00pm (UK)

The legal, ethical and reputational risk of bribery is real. Billions in fines are levied every year and frequent reports of investigations and prosecutions from regulating authorities across the world hit the headlines.

During this webinar, we will explore some of the biggest bribery cases in recent years and what you can learn from them to avoid the next fine or PR disaster.

The webinar will cover:

  • Major anti-corruption and bribery cases and what we can learn
  • The impact COVID-19 has had on anti-bribery and corruption
  • The industries most vulnerable to bribery and corruption
  • Guidance for whistleblowers and how they are handled by authorities
  • Anti-bribery training requirements and best practice
  • Answering attendee questions

Free registration

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VinciWorks to release new online PECR video course

We’ve come a long way from the times when the best way to market was to print an ad in the newspaper. Most marketing now is done digitally, using email, texts, or sometimes still phone and fax, but when using these methods, users’ privacy must be considered. If your marketing staff uses phone, email, text or fax, if your organisation uses cookies or similar technology on its website, or compiles any sort of telephone directory of contact numbers, PECR applies to you. 

PECR refers to the EU’s Privacy and Electronic Communications Regulations 2003, a law that governs how businesses are allowed to market to customers using electronic technology. The law is wide-reaching as it covers all industries and is applicable across the board. Breaches of PECR can leave company directors personally liable for fines of up to £500,000 per breach. PECR is applicable across the EU and the UK, and the law in the UK as it applies now will not be affected by Brexit.

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How do the UK’s DAC6 amendments impact foreign lawyers working in the UK?

The UK has amended its DAC6 regulations as a result of the Brexit Free Trade Agreement. Only arrangements meeting the Hallmark D category will require reporting in the UK. This means that EU registered lawyers working in the UK might need to file DAC6 reports in the European Union. 

The EU Directive states that in order to be considered an intermediary, a person shall meet at least one of the following conditions:

(a) be resident for tax purposes in a member state;

(b) have a permanent establishment in a member state through which the services with respect to the arrangement are provided;

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DAC6: Will a DAC6 report in the UK provide sufficient evidence for EU member states?

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In light of the amended UK DAC6 regulations as a result of the Brexit Free Trade Agreement, the Netherlands Tax and Customs Administration has confirmed to VinciWorks that a UK DAC6 report will not be accepted as sufficient evidence of a DAC6 report in the Netherlands.  

The Netherlands have confirmed that in line with the DAC6 Directive, they will send all DAC6 reports to the European database. However, the Dutch Mandatory Disclosure Team has made it clear that they have no obligation to share reports in any other way and the Netherlands will not actively do so. We will have to wait and see if and what the EU will decide on the exchange of information between EU countries and the UK. 

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The Australian Modern Slavery Act – compliance best practice

Is slavery a thing of the past? Unfortunately not. According to the Global Slavery Index, it is estimated that on any given day, there are 15,000 people living in conditions of modern slavery in Australia. Cases of forced labour exploitation are especially high in industries considered high risk, such as agriculture, construction, domestic labour, meat processing, cleaning, hospitality, and food services.

As such, Australia’s implementation of the Modern Slavery Act 2018, which came into effect on 1 January 2019 was a welcome, if overdue, step in the effort to combat modern slavery. While the act technically went into effect last year, 2020 is the first year that organisations that fall within the scope of the law will actually be required to report.

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DAC6: VinciWorks hosts HMRC’s James Marshall following the UK’s amendments to DAC6

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On New Year’s Eve, HMRC made a surprise announcement that the UK is limiting the scope of DAC6 to only apply where a category D hallmark is present. This was in line with the UK’s obligations under the Brexit Free Trade Agreement, which requires the UK to implement, at a minimum, the standards and rules which have been agreed in the OECD concerning potential cross-border tax planning arrangements.

Last week VinciWorks hosted James Marshall, HMRC’s DAC6 Policy Lead to find out more about HMRC’s intentions. Here’s a summary of what was discussed:

Reporting for the historic period: HMRC expect only category D Hallmark arrangements to be reported for the historic periods (both the original period and COVID extension periods).

Reporting from 1 January 2021: HMRC expect only category D Hallmark arrangements to be reported.

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The development of the UK Bribery Act 2010

Bribery and corruption in context

As the UK Bribery Act 2010, the world’s strongest piece of anti-corruption legislation reaches its tenth year, we look back on how the Bribery Act came to be.

Corruption you can see

The case of John Poulson provides an example of how small-scale bribery can, if unchecked, build up into a multi-million pound industry. Over 30 years Poulson, though not a qualified architect, and starting with just a £50 loan, built up the largest architectural practice in Europe through the corrupt purchase of local government contracts in northern England, and of contracts for the re-development of major railway termini through bribery of a British Rail employee, Graham Tunbridge. The bribes involved were not always large. When Tunbridge became Estates and Rating Surveyor for BR Southern Region, he gave Poulson contracts for the redevelopment of London Waterloo, Cannon Street and East Croydon stations–all in return for £253 a week and the loan of a Rover car.

Such corruption breeds more corruption; it was estimated at Poulson’s trial that 23 local authorities and over 300 individuals were involved. But the corruption had other deleterious effects. Taxpayers’ money was misused in paying more than the contracts might have cost on an open public tender. 

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HMRC joins VinciWorks in DAC6 webinar – Listen now

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Unexpectedly, and despite comments to the contrary, the UK has decided to implement its own MDR regime. Until this happens, DAC6 still applies in the UK for Hallmark D. Considering that the UK has been a leader in the fight against corruption and tax evasion, its version of MDR will possibly be broader and even more stringent.

It was an honour to host James Marshall of HMRC to discuss the UK’s changes to DAC6 post Brexit.

The webinar covered:

  • What changed with DAC6 in the UK?
  • How do these changes affect DAC6 reporting?
  • How will Omnitrack adapt to these changes?
  • What are the UK’s longer-term plans for MDR?
  • Answering attendee questions

A recording of the webinar is available as a podcast. You can listen to it in Apple Podcasts, Spotify etc. or directly by clicking on the button below.

Listen to our podcast

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DAC6 reporting – What is so special about hallmark D?

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In response to the Brexit Free Trade Agreement, the UK has limited the scope of DAC6 to only apply where a Category D hallmark is present. 

This dramatic change is in line with the UK’s obligations under the Fair Trade Agreement that requires the UK to implement, at a minimum, the standards and rules which have been agreed by the OECD concerning potential cross-border tax planning arrangements.

Hallmark D arrangements are those designed to undermine tax reporting under common reporting standard and transparency rules. This shares substantial common ground with the Mandatory Disclosure Regime (MDR) developed by the OECD. 

The hallmark D category is split into two types of arrangements:

  • D(1) Arrangements that have the effect of undermining reporting requirements under agreements for the automatic exchange of information.
  • D(2) Arrangements that obscure beneficial ownership and involve the use of offshore entities and structures with no real substance.
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New compliance regulations in China

Sexual harassment and privacy rules in force in 2021

Effective as of January 1, 2021, Article 1010 of the Civil Code obliges companies to adopt measures for preventing sexual harassment in the workplace. This means employers have a duty to take action against sexual harassment. This includes:

  • Having a channel to complain about sexual harassment
  • Having a procedure for investigating complaints
  • Having rules to discipline wrongdoers

What does the law say?

Article 1010 of the Code stipulates that:

“Where a person sexually harasses another person against his or her will through verbal behavior, words, images, physical behavior, or other forms, the victim has the right to request the perpetrator to assume civil liability according to the law.

Government agencies, enterprises, schools and other entities shall take reasonable measures of prevention, acceptance of complaints, investigation and handling, so as to prevent and cease sexual harassment conducted by violators by making use of their powers, supervisor/subordinate relationships, etc.”

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