EVENTS

S&W Sessions: Mandatory Disclosure Rules & DAC6 - Are you ready?

  • Date: 13 Feb 2019
  • Time: 09:30 - 10:30
  • Venue: webinar, hosted via webEx, join from any location, use the link below


S&W Sessions are a regular series of thought provoking hot topic webinars that are relevant to your business.

In response to the OECD‘s Mandatory Disclosure Rules (BEPS Action Plan 12) the EU introduced a new Directive, DAC6, which came into force on 25 June 2018 and requires Member States to automatically exchange information on offshore arrangements.  HMRC have confirmed that the legislation will continue to be in force post Brexit.

Although reporting is not required until 2020, businesses need to act now as transactions from 25 June 2018 are in scope and it will be a heavily burdensome and higher risk exercise to retrospectively review transactions.

Join this webinar to gain an insight into the rules and understanding of how to prepare now and what businesses should be doing going forwards to be compliant with these provisions.

The webinar will touch upon the following:

  • Details of DAC6 and who is affected
  • Key dates and scope of the provisions
  • How business should be preparing
  • How we can help?

Who should view the webinar?

Businesses and intermediaries with cross border arrangements

Overview

What is MDR (Manadatory Disclosure Rules) & DAC6

  • Mandatory Disclosure Rules ("MDR") part of the OECD's BEPS Action Plan 12
  • Directive on Administrative Cooperation ("DAC") 6 - EU's response to MDR but taking it one step further
  • Directive came into force 25 June 2018 but no requirement to report until 2020
  • Requires intermediaries and taxpayers to report certain tax planning arrangements to tax authorities
  • Member States to automatically exchange information on offshore arrangements
  • Penalties for non-compliance

Purpose of DAC 6

  • Tax transparency - Increase exchange of information between tax authorities
  • Counter tax avoidance - Increased focus of tax authorities on tax avoidance activity
  • Identify aggressive tax planning - Applies to transactions that may have a potential tax effect
  • Data collection - Huge growth in amount of taxpayer information sought to support revenue raising activity

Timeline

  • 5 June 2018 - New Directive published in the Official Journal of European Union
  • 25 June 2018 - DAC6 comes into force
  • 31 December 2019 - Secondary legislation and HMRC guidance to be published
  • 1 July 2020 - Law giving effect to DAC6 to be in effect, including 30 day reporting
  • 31 August 2020 - Reports to be filed in respect of retrospective reportable arrangements
  • 31 October 2020 - First exchange of information with Member States

Scope of directive - reporting obligation

Intermediaries

  • Person that is involved in designing, marketing, organising or managing the implementation of a reportable cross border transaction or series of such transactions
  • Also includes those who provide assistance or advice 
  • What if multiple intermediaries?
  • Does intermediary have legal profession privilege (LPP)

Taxpayer

  • Where there is no intermediary
  • Or where intermediary has LPP and there are no other intermediaries

Scope of directive - Hallmarks

There are 5 Hallmarks - widely drafted

  1. General hallmarks linked to the main benefit test;
  2. Specific hallmarks linked to the main benefit test;
  3. Specific hallmarks linked to cross border transactions (that are partly subject to the main benefit test);
  4. Specific hallmarks concerning automatic exchange of information and beneficial ownership; and
  5. Specific hallmarks concerning transfer pricing
  • Not many definitions - expect HMRC to include these when legislation released

Challenges

  • No definitions therefore identifying reportable arrangements is difficult
  • No legislation or guidance
  • Commercial transactions in scope
  • For FS sector - volume of number of reportable arrangement (same transactions with multiple clients)
  • Unlikely that one person within an intermediary has all the facts to determine if the arrangement falls within hallmarks - will need to put the processes in place
  • Timing of reporting

Interaction with other EU jurisdictions 

  • Not many EU countries have released legislation or guidance 
  • Anticipate differences which will make reporting challenging 
  • Data sharing- EU have confirmed GDPR compliant
  • Availability of data will provide EU tax authorities ability to conduct tax audits
  • Brexit impact

How can S&W help?

Impact assessment  
Consider impact as intermediary/ taxpayer Consider historic transactions
Identify functions/ products that might be caught Plan approach
Assess size of impact  
   
Identify processes  
Consider existing processes and necessary enhancements Consider how relevant information should be collected and analysed
Record relevant transactions since June 2018 Leverage existing information reporting processes
   
Agree internal responsibilities  
Identify stakeholders Appropriate training
Agree who should take responsibility Reporting to tax payers
Consider appropriate sign-offs  
   
Implement reporting frameworks  
Structured data collection framework Ensure appropriate audit trail
Implement reporting tool to monitor, identify and capture arrangements Reporting schema
   
Monitor legislation developments   
Monitor UK legislation and guidance releases Industry association updates
Consider interaction with other EU countries  

 

 

Register for the next S&W Session

 

Back to Webinars homepage

 

Cookie Settings