Draft regulations: implementation of disclosable arrangements

25 July 2019

Draft regulations have been published which will require taxpayers and their advisers to report details to HMRC of certain cross border arrangements that could be used to avoid or evade tax.


At Budget 2018, the Government announced that it would introduce new rules requiring the disclosure of certain offshore arrangements and structures that could be used to avoid or evade tax. The Government is consulting on the draft Regulations which will implement an EU directive known as DAC 6 and will bring those rules into effect.



In the last decade, the UK has collaborated with other governments around the world to introduce a range of measures to tackle offshore non-compliance. This includes the exchange of financial account data and information about the profits made, and taxes paid, by multinational corporations in different jurisdictions, which has helped HMRC to raise over £2.9bn by tacking offshore non-compliance since 2010. Alongside this, the UK has also introduced the Disclosure of Tax Avoidance Schemes (DOTAS) and Enablers of Tax Avoidance legislation, which require the promoters and users of tax avoidance schemes to provide HMRC with specific information about those schemes. All of this information helps HMRC to identify and challenge tax avoidance and evasion.


Despite these measures, HMRC continues to see evidence of companies and individuals entering into tax avoidance and evasion arrangements which are intended to reduce their tax liabilities, both in the UK and abroad, and arrangements intended to hide ownership of assets from tax authorities.


The UK has worked closely with other jurisdictions to find ways to effectively identify and tackle these kinds of arrangements. In particular, the government worked with the Organisation for Economic Cooperation and Development (the OECD), the EU Commission and other EU member states to introduce the Directive on Administrative Cooperation (DAC) in 2011, and the subsequent amendments to the DAC, which have introduced measures including the Common Reporting Standard and Country-by-Country reporting. 


The latest amendment to the DAC is EU Directive 2018/822, commonly known as DAC 6, which entered into force on 25 May 2018. Member states are required to put in place legislation giving effect to the provisions of the Directive by 31 December 2019.


The Government is now consulting on draft Regulations to implement DAC 6. The Regulations will require promoters, intermediaries and taxpayers to report details of certain types of cross-border arrangements to HMRC, where those arrangements meet certain hallmarks or criteria. HMRC will share information received in these reports with other EU member states, who will in turn share reports they receive with HMRC. This will provide HMRC with early information about new schemes which could be used to avoid or evade tax, enabling timely compliance action to be taken.


The draft Regulations draw directly on definitions and concepts contained in DAC 6. This consultation document sets out the approach HMRC intends to take in interpreting DAC 6, and elaborates on how the rules will operate in practice. HMRC will provide guidance on DAC 6 alongside the finalised Regulations


The consultation sets out HMRC’s current views on the various elements of DAC 6 and seeks your views to help it refine its interpretation of the Directive and understand how best to frame the guidance.


The consultation ‘International Tax Enforcement: disclosable arrangements' closes at 11:45pm on 11 October 2019