The UK tax authority, HM Revenue and Customs, has announced that it will repeal the DAC6 reporting requirement in 2021 and replace it with the OECD’s mandatory disclosure rules (MDR).
The announcement was made after completion of the negotiations between the UK and the EU on a Free Trade Agreement (FTA).
In a letter sent to stakeholders on December 31, HMRC said that reporting under DAC6 will still be required for a limited time, but only for arrangements which meet hallmarks under Category D, in line with the UK’s obligations under the FTA.
Category D sets out specific hallmarks concerning automatic exchange of information and beneficial ownership.
The International Tax Enforcement (Disclosable Arrangements) (Amendment) (No. 2) (EU Exit) Regulations, 2020 – laid before the House of Commons on December 30 – state that “(5) For the purposes of these Regulations, the DAC is to be read as if— (h) in Annex IV, Part 1 [the Main Benefit Test] and hallmark categories A, B, C and E in Part II were omitted.”
In the coming year, the UK will consult on and implement the OECD’s MDR as soon as practicable, to replace DAC6 and transition from European to international rules, HMRC told stakeholders.