International tax enforcement – DAC6

On 1 July 2020, the International Tax Enforcement (Disclosable Arrangements) Regulations 2020, often referred to as DAC6, came into force in the UK. It requires the disclosure to HMRC of cross-border arrangements that meet certain hallmarks or criteria. Intermediaries with an EU nexus have the primary obligation to report, but where there is no reportable intermediary the obligation falls on the taxpayer.

Because of COVID-19, UK reporting has been deferred by six months. There are now three periods which must be reported:

The look back period – arrangements implemented between 25 June 2018 and 30 June 2020 must be reported by 28 February 2021.

The deferred period – arrangements between 1 July 2020 and 31 December 2020, must be reported by 31 January 2021.

Going forward – arrangements which become reportable on or after 1 January 2021 must be reported within 30 days. 

Failure to make a return could result in a penalty of up to £5,000 or if HMRC consider that to be “inappropriately low”, a per diem penalty may be imposed. The maximum penalty at the First-tier Tribunal is £1,000,000. 

We offer solutions to help you understand the changing regulations and guidance – and the interaction with other EU countries, some of which have different reporting deadlines. For the look back period and deferred period, we will examine the arrangements to determine whether they meet any of the hallmark tests, establish who has the obligation to report and the data required for reporting.

From 1 January 2021, the 30-day reporting obligation will put pressures on companies to identify and collect the relevant data. We will invest the time to guide you and assist you in establishing a reporting strategy and process.