ICAEW.com works better with JavaScript enabled.


Mandatory disclosure rules replace DAC 6 in the UK


Published: 24 Jan 2023 Update History

Cross-border tax avoidance arrangement disclosure rules devised by the OECD (known as the mandatory disclosure rules, or MDR) will enter into force in the UK on 28 March 2023. Arrangements entered into on or after this date must be reported to HMRC under this regime.

The International Tax Enforcement (Disclosable Arrangements Regulations 2023) were agreed by Parliament in January 2023, enshrining MDR into UK law. 

Prior to that date (from January 2021), the UK adopted the EU’s DAC 6 rules (or Council Directive (EU) 2018/822) with some modifications through The International Tax Enforcement (Disclosable Arrangements) Regulations 2020, SI 2020/25

The main difference between DAC 6 and MDR is that only two of the hallmarks (D1 and D2) where a disclosure is required under DAC 6 are present under MDR. These are arrangements designed to undermine tax reporting under common reporting standard and transparency rules and are split into two types:

  • Arrangements that have the effect of undermining reporting requirements under agreements for the automatic exchange of information.
  • Arrangements that obscure beneficial ownership and involve the use of offshore entities and structures with no real substance.

This reduced reporting requirement was reflected in SI 2020/25, which came into force in the UK at the start of 2021. Those regulations will be repealed on 28 March, but the existing reporting portal will remain open for one month to allow arrangements entered into before 28 March 2023 to be reported.

The Disclosable Arrangements Regulations 2023 were consulted on from November 2021. A summary of responses to the consultation was published in November 2022. The ‘look back’ period for reporting pre-existing arrangements, initially stretching back to 29 October 2014, has been revised to 25 June 2018 (the same as under DAC 6) – a welcome change from the original draft of the regulations. This issue was raised by the Tax Faculty in ICAEW REP 10/22.

There is also an exemption to the look back period in relation to CRS avoidance arrangements, where the amount involved is less than US$1m. In addition, an exemption applies where relevant information has already been provided under DAC 6. As with the existing DAC 6 reporting framework, there will be no online manual system for businesses or agents to submit reports. They will be required to continue reporting using XML software.

HMRC is in the process of adapting existing guidance at IEIM600000 onwards to reflect the adoption of the new regulations.

Read more from ICAEW on DAC 6 and the OECD’s mandatory disclosure regime.

The Tax Faculty

ICAEW's Tax Faculty is recognised internationally as a leading authority and source of expertise on taxation. The faculty is the voice of tax for ICAEW, responsible for all submissions to the tax authorities. Join the Faculty for expert guidance and support enabling you to provide the best advice on tax to your clients or business.

More support on tax

ICAEW's Tax Faculty provides technical guidance and practical support on tax practice and policy. You can sign up to the Tax Faculty's free enewsletter (TAXwire) which provides weekly updates on developments in tax.

Sign up for TAXwireJoin the Tax Faculty

More from the Tax Faculty

Latest news
Making tax digital image

Stay up to date with the latest developments in tax by signing up to the Tax Faculty's weekly e-newsletter

Practical guidance

Comprehensive support for Tax practitioners each month from the Tax Faculty and expert contributors.

Technical support
Tax Faculty image

Expert advice from the Tax Faculty's technical managers on all the developments in tax policy and practice.