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DAC 6 regime

Overview

The EU Commission has announced that, as a result of the Covid-19 crisis, the first reporting deadline for the new DAC 6 regime (EU directive 2018/822) will be delayed by 3 months.  

The EU Commission has indicated that it will consider a further delay of another 3 months, depending upon the progress of the pandemic. 


Generally, disclosures must be made within 30-days of a relevant first step. Whilst HMRC has yet to publish any guidance reflecting the postponement, we expect that the date for the beginning of the period of 30 days will be delayed from 1 July 2020 to 1 October 2020. This means that businesses will now be required to disclose all transactions which satisfy the DAC 6 test and in respect of which the first implementation step took place on or after 1 July 2020 (but before 1 October 2020) by 31 October 2020.  Historic transactions implemented after 25 June 2018 (but before 1 July 2020) must then be reported by 30 November 2020
 

From 1 October 2020, reports must generally be filed within 30 days of the earlier of the day after the date on which the arrangement is made available (or is ready) for implementation and the date on which the first step is taken or, in the case of advisers, 30 days after advice is first given on a matter.

This delay is helpful at a time when businesses are still adapting to new working practices driven by the Covid-19 crisis.  However, the delay is of limited duration and it is important that businesses make the most of the additional time by analysing whether reporting obligations have arisen in respect of any transactions since 25 June 2018 and developing procedures for applying the rules to future transactions now. 

DAC 6 is the new EU disclosure regime that imposes mandatory reporting of cross-border arrangements which meet one or more specified hallmarks. "Cross-border arrangements" are arrangements which concern either more than one EU country or an EU country and a non-EU country. The rules are similar in structure to the UK's existing disclosure of tax avoidance schemes (DOTAS) regime. However, the hallmarks are widely drafted and may capture transactions which do not have a tax avoidance motive. The rules must be carefully considered for all transactions with a "cross-border" element.

DAC 6 reports must be submitted by relevant intermediaries (usually advisers on the transaction) or, in the absence of a disclosing intermediary (e.g. if the adviser was a solicitor, prevented from making disclosure by legal professional privilege), by the taxpayer themselves. 

Travers Smith are already working with a number of clients to assist them to comply with their obligations under this new disclosure regime. Whilst we may not be able to make disclosures to HMRC on your behalf (as our communications with you are usually subject to legal professional privilege) we can conduct a detailed review of your transactions to determine which transactions are disclosable. We can also advise on what information should be provided to HMRC when making a disclosure. Please contact us if you would like to know more about the assistance we could offer your business.