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In their latest draft guidance, HMRC have provided some additional clarity in relation to reporting triggers (note: this may still be subject to change). Vinciworks has summarised the additional clarifications below, along with explanations and examples:
Reporting triggers for promoters
There is a requirement for promoters to make a relevant report within 30 days of the earliest of:
- The day after the arrangement is made available for implementation
- The day after the arrangement is ready for implementation
- When the first step in the implementation of the arrangement has been made
1. The day after the arrangement is made available for implementation
Normally, the design of an arrangement will be final before the arrangement can be said to be made available for implementation. It wouldn’t be considered made available for implementation if there were material factors of the arrangement that were still subject to change.
An arrangement could be made available to a relevant taxpayer in many different ways. These include:
- A taxpayer approaches a promoter seeking advice or ideas, and the promoter could make available an arrangement in response to that request.
- An arrangement is made available in the course of other work between an intermediary and a client (for example if the intermediary identifies a potential need and suggests the arrangement as a solution)
- An arrangement is proactively made available to prospective clients through a marketing campaign
2. The day after the arrangement is ready for implementation
An arrangement could be ready for implementation before it is made available for implementation. This could be the case if a promoter has finalised the design of an arrangement, but decided not to promote it to potential clients until a later date (for example because the arrangement relied on legislation which had not yet come into force). If the arrangement is sufficiently finalised that it could be implemented by a client, then it will meet this test.
3. When the first step in the implementation of the arrangement has been made
When the first step of an arrangement is implemented is a question of fact, and it would differ on a case by case basis.
If an arrangement’s design has been agreed upon and a decision has been taken to go ahead with the arrangement, then a first step would be the initial step taken that will allow implementation of an arrangement as soon as the details are finalised, even if precise details of certain later steps in the arrangement are still not ready.
An example given by HMRC involves a company who has designed an arrangement in-house that will involve the transfer of assets to an overseas subsidiary, falling under hallmark E3. In this situation, the act of incorporating a subsidiary to receive the transferred assets would be considered a first step (even if they were still finalising the precise details of certain later steps in the transaction) if all the details in this case have been worked out and the incorporation of the overseas subsidiary was in order to risk delays.
Reporting triggers for service providers
The reporting obligations of service providers are different to those of a promoter. Service providers are required to file a report within a period of 30 days beginning on the day after they provide aid, assistance or advice in respect of the arrangement. This could include providing finance, expertise or knowledge, sharing experience or offering legal or accounting advice. The point at which aid, assistance or advice should be treated as ‘provided’ will depend on the facts of the case.
Reporting obligations for marketable arrangements
If an arrangement is considered to be a marketable arrangement, then there is an obligation for intermediaries to provide further returns every three months with new reportable information relating to:
- The details of relevant taxpayers and associated enterprises
- The date on which the first steps of the arrangement were implemented by the various relevant taxpayers
- The EU member State(s) where the relevant taxpayers are resident, and any other member States that the arrangement is likely to concern
- The identification of any other persons in EU member States that are likely to be affected by the arrangement.
VinciWorks’ DAC6 reporting tool for all reporting workflows
VinciWorks has consulted tax experts across Europe and brought together over 100 leading international law and accounting firms, as well as leading tax experts, to develop best-practice for DAC6. Our DAC6 reporting tool features workflows designed and updated for the intricacies of each EU member state’s implementation of DAC6.
