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DAC 6: the role of intermediaries

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HMRC has published a research report DAC 6: disclosure of cross-border arrangements on the role of intermediaries in cross-border tax arrangements. DAC 6 requires intermediaries to report details of certain types of cross-border tax arrangements to tax authorities. The research aimed to deepen HMRC’s understanding of:

  • the profile of the UK intermediary population (accountants, tax advisers, banks, lawyers and wealth managers) in the context of cross-border arrangements;
  • the possible impact of the new regulations on tax planning and avoidance-related activity, particularly among high net worth individuals and multinational corporates; and
  • the potential impact of the new regulations on the intermediary population and the level of awareness of the new regulations.

According to the report, intermediaries’ awareness of DAC 6 was generally low, and a large proportion of lawyers (59%), accountants and tax advisers (47%) and wealth managers (43%) had not heard of the regulations at all. Most banks, on the other hand, had some level of awareness of the rules (76%).

Around half of each group that were aware of DAC 6 were confident of what would constitute a reporting requirement under the regulations. However, the report suggests that most of the intermediaries who were aware, tended to have a fairly superficial overview of the regulations.

Intermediaries tended to think that reporting would only be required if the arrangement was linked to ‘aggressive’ tax planning or avoidance, and therefore did not feel the arrangements would impact them or their clients, for whom tax was not the primary consideration. Some speculated that the regulations could be a burden to their business.

It was very rare for intermediaries to have received enquiries from their clients about DAC 6. There were mixed views among respondents about whether they would engage with clients about DAC 6 with some planning to notify their clients about the regulations, while others would be hesitant to inform customers in case it alarmed them, especially if they felt it would not affect the client’s arrangements.

Most intermediaries expected that there will be no impact on client behaviour as they were not using aggressive tax structures anyway, but some intermediaries speculated that clients may stop using tax structures under scrutiny under DAC 6.

In the UK, DAC6 is implemented by the International Tax Enforcement (Disclosable Arrangements) Regulations, SI 2020/25, with a number of relaxations to reporting deadlines introduced by the International Tax Enforcement (Disclosable Arrangements) (Coronavirus) (Amendment) Regulations, SI 2020/713.

Issue: 1499
Categories: News
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