Council Directive (EU) 2018/822 amending Directive 2011/16/EU otherwise known as DAC 6 was to be implemented in the UK from 1 January 2021. DAC 6, in effect, would have required certain cross-border arrangements and transactions to be reported to HMRC with the first disclosures being required on 30 January 2021. HMRC, however, have confirmed that the UK will no longer be applying DAC 6 in its entirety following the conclusion of the Free Trade Agreement with the EU. Only arrangements that would have fallen within ‘Category D’ of DAC 6 will now need to be reported, in line with the OECD’s mandatory disclosure rules.
‘Category D’ covers those arrangements designed to undermine tax reporting under common reporting standard and transparency rules and include those which:
· have the effect of undermining reporting requirements under agreements for the automatic exchange of information
· obscure beneficial ownership and involve the use of offshore entities and structures with no real substance
However, it should be noted that as DAC 6 covers cross-border transactions and arrangements, there could still be a reportable requirement under the full DAC 6, to notify other tax authorities should arrangements involve parties who remain within the EU.