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The UK seeks legislative freedom by withdrawing from DAC6’s disclosure provisions

Following Brexit, the UK government has decided not to proceed with the implementation of the EU’s Council Directive (EU) 2018/822 (DAC6), which involves mandatory disclosure of cross-border tax planning schemes.

With the new free trade agreement signed by the UK with the EU, both countries committed to complying with OECD standards, but not requiring either to go beyond them.

As a consequence, the UK statutory instrument implementing DAC6 will be replaced with a new instrument requiring UK intermediaries to report only schemes circumventing the OECD’s Common Reporting Standard (CRS) or concealing beneficial ownership of entities (also known as Category D tax planning).

The issue is that DAC6 reporting requirements comprehended a much broader of tax planning schemes, which from now will be regulated exclusively by the UK’s pre-existing legislation, focusing exclusively on tax avoidance schemes.

While the scheme seeks to reduce the burden of compliance for businesses, it is to be noted that DAC6 reporting requirements for the UK will still apply where an EU intermediary is involved in a transaction.

SOURCE: www.legislation.gov.uk