The European Commission has proposed extending a number of
deadlines relating to the exchange of information under the Directive for
Administrative Cooperation (2011/16/EU), deferring exchange of information
reporting between member states for three months to 31 December 2020, and
deferring the deadlines for reporting under DAC 6 on cross-border tax
arrangements.
Welcoming the additional time provided by the extension, Gary
Ashford, partner at Harbottle & Lewis said: ‘There are sizeable penalties
for failure to comply with the new rules and Intermediaries should not
underestimate the work required to identify those historic transactions that
may need to be reported. It is also important that the DAC 6 rules are not just
regarded to be the same as the UK DOTAS rules mark 2.0. Some of the hallmarks
in DAC 6 have no link to any tax advantage and are reportable whatever the
reasons. Even with the extension the timeline will be tight, particularly when
many advisers are working with their clients to keep them afloat due to the
Covid disruption.’
Ben Jones, partner at Eversheds Sutherland noted that ‘many
businesses will be disappointed that a longer period of postponement
(preferably 12 months) has not been proposed. The length and severity of
continued lockdown measures across Europe is still unknown and, in any event,
many businesses will inevitably need to focus resources in areas other than DAC
6 compliance well into the post-lockdown period.’
Separately, HMRC has updated its guidance on DAC 6 in its International
Exchange of Information Manual in recognition of the reporting challenges faced
by taxpayers and intermediaries in implementing because of Covid-19. HMRC will
accept that any taxpayer or intermediary who makes a report late because of
these difficulties will have a reasonable excuse (and so will not be liable to
any penalties for that delay), provided the report is made without unreasonable
delay after those difficulties are resolved.
The European Commission has proposed extending a number of
deadlines relating to the exchange of information under the Directive for
Administrative Cooperation (2011/16/EU), deferring exchange of information
reporting between member states for three months to 31 December 2020, and
deferring the deadlines for reporting under DAC 6 on cross-border tax
arrangements.
Welcoming the additional time provided by the extension, Gary
Ashford, partner at Harbottle & Lewis said: ‘There are sizeable penalties
for failure to comply with the new rules and Intermediaries should not
underestimate the work required to identify those historic transactions that
may need to be reported. It is also important that the DAC 6 rules are not just
regarded to be the same as the UK DOTAS rules mark 2.0. Some of the hallmarks
in DAC 6 have no link to any tax advantage and are reportable whatever the
reasons. Even with the extension the timeline will be tight, particularly when
many advisers are working with their clients to keep them afloat due to the
Covid disruption.’
Ben Jones, partner at Eversheds Sutherland noted that ‘many
businesses will be disappointed that a longer period of postponement
(preferably 12 months) has not been proposed. The length and severity of
continued lockdown measures across Europe is still unknown and, in any event,
many businesses will inevitably need to focus resources in areas other than DAC
6 compliance well into the post-lockdown period.’
Separately, HMRC has updated its guidance on DAC 6 in its International
Exchange of Information Manual in recognition of the reporting challenges faced
by taxpayers and intermediaries in implementing because of Covid-19. HMRC will
accept that any taxpayer or intermediary who makes a report late because of
these difficulties will have a reasonable excuse (and so will not be liable to
any penalties for that delay), provided the report is made without unreasonable
delay after those difficulties are resolved.
