UK and International Tax news

HMRC Issues Consultation On Disclosable Cross Border Transactions

Monday 12th August 2019

HMRC has issued a consultation document on draft regulations to implement the EU Directive known as DAC 6 [2018/322] which provides for rules aimed at requiring intermediaries to automatically disclose information on potentially aggressive tax planning arrangements.

The EU Directive/DAC6 targets intermediaries such as tax advisors, accountants and lawyers who design and/or promote tax planning schemes and who will be obliged to report these structures to their tax authorities. In turn, EU member states will exchange this information with each other, further increasing scrutiny around the activities of tax planners and advisers.  DAC 6 entered into force in May 2018.

Cross border tax planning schemes can bear certain characteristics or ‘hallmarks’ that indicate a risk of tax avoidance or evasion. Such hallmarks can include the use of cross border losses to reduce tax liability, the use of special preferential tax regimes, or arrangements through countries that do not meet international good governance standards. Intermediaries that design or provide schemes bearing any one of these key hallmarks will now have to report these schemes to the tax authorities before they are used.

HMRC’s condoc makes reference to five categories of hallmarks, three of which refer to the main benefit test of securing a tax advantage whilst the other two relate to undermining reporting obligations under the Common Reporting Standard, obscuring beneficial ownership, and to transfer pricing and seek disclosure of arrangements that are contrary to the OECD’s Transfer Pricing Guidelines for Multinational Enterprises.

The consultation runs from 22 July 2019 to 11 October 2019 and HMRC intend to lay the new Regulations before Parliament before 31 December 2019.

The new reporting requirements will enter into force on 1 July 2020 with EU member states obliged to exchange information every three months after that. The first exchange will take place by 31st October 2020.


If you would like more details on the new disclosure requirements, please contact Keith Rushen on 0207 486 2378.

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