HMRC have updated their DAC6 guidance following the unexpected announcement on 31 December 2020 that in light of Brexit, DAC6 would be changed in the UK to be more aligned with the OECD’s model Mandatory Disclosure Rules. The changes were implemented through Statutory Instrument 2020/1649.
What are the changes in the updated HMRC DAC6 guidance?
The HMRC has updated its DAC6 guidance following the conclusion of the UK’s Free Trade Agreement with the EU. The UK’s tax authority, Her Majesty’s Revenue and Customs (HMRC), has confirmed that the UK will no longer be applying DAC6 in its entirety. Reporting will still be required for a limited time, but only for arrangements which meet hallmarks under Category D of the DAC6 legislation.
In the coming year, the UK intends to implement the OECD’s Mandatory Disclosure Rules (the “MDR”) to replace DAC6 and transition from EU to international rules.
Definition of “cross-border” and “states”
The updated guidance stipulates that references in the Directive to a ‘member state’ are to be read as if they were references to a ‘state’, where ‘state’ is defined as being the UK or an EU member state.
Therefore, for the purposes of the UK regulations, an arrangement will be cross-border if it concerns:
- The UK and an EU member state
- The UK and a non-EU member state
- Two or more EU member states
- An EU member state and a third country.
The overseas territories and dependencies of the UK and EU member states are considered to be separate jurisdictions and arrangements involving those jurisdictions should be analysed accordingly for reporting purposes.
Hallmarks
The guidance stipulates that hallmark categories A, B, C and E are no longer relevant for the purposes of UK reporting. This applies to all arrangements caught by the regulations regardless of when they were entered into, or when they were made available for implementation or ready for implementation.
Main Benefit Test
The guidance also explains that the concept of tax advantage is no longer relevant in applying the main benefit test. This is due to the fact that the main benefit test does not apply to hallmarks under category D.
VinciWorks’ DAC6 Solution has been updated to support UK DAC6 reporting and offers a global reporting solution for international firms for MDR regulations in many other jurisdictions too.Get in touch with us to see how Omnitrack can help ensure you are completing your reporting requirements.
VinciWorks’ DAC6 reporting solution
VinciWorks’ DAC6 Solution has been updated to support UK DAC6 reporting and offers a global reporting solution for international firms for MDR regulations in many other jurisdictions too. Get in touch with us to see how Omnitrack can help ensure you are completing your reporting requirements.
