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【Wealth Succession】UK withdraws from most of DAC6’s disclosure provisions

The UK government will cancel almost all of its planned implementation of the EU’s Council Directive (EU) 2018/822 (DAC6), regarding mandatory disclosure of cross-border tax planning schemes.

The move is one of the first manifestations of the UK’s new legislative freedom following the end of the EU exit transition period on 31 December 2020. Prime Minister Boris Johnson signed a free trade agreement with the EU on 24 December, under which both the UK and the EU committed to complying with OECD standards, but not requiring either to go beyond them.

Accordingly, the UK statutory instrument that was enacted to implement DAC6 will be repealed and replaced with a new instrument that requires UK intermediaries only to report so-called Category D tax planning: schemes that seek to either circumvent the OECD’s Common Reporting Standard tax information exchange system or conceal beneficial ownership of entities. HMRC has confirmed to STEP that only arrangements that meet the hallmarks under Category D will now need to be reported, therefore historic reporting (for arrangements up to 31 December 2020) in respect of the other hallmarks will no longer be required.

No arrangements of any kind have actually been reported yet, because activation of DAC6 has been delayed by the COVID-19 crisis and HMRC’s reporting portal did not open until 1 January 2021......

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