Is there anything to report?
Angela Clegg explains the new reporting requirement that could apply to transactions that happen on or after 25 June 2018.
The policy driver for this reporting requirement is that tax authorities will discover and be able to react promptly to tackle aggressive tax arrangements. The legislation is often referred to as ‘DAC 6’, which is the shortened term for Council Directive 2018/822 EU (amending 2011/16 EU).
This requires the mandatory automatic exchange of information in relation to cross-border arrangements which meet one or more hallmark. However, it is important to note that the rules are much wider than the existing UK rules on the disclosure of tax avoidance schemes (DOTAS). Benign or commercial arrangements with no tax motive can routinely be caught and require reporting. It is therefore imperative those advisers involved in transactions which have an EU footprint consider their obligations under the Directive on an ongoing basis as it will not always be immediately apparent that an arrangement is caught. To make matters more complex, the Directive will require reporting of some transactions as far back as June 2018 in certain circumstances.