DAC6 – delayed but be alert!
EU Directive 2018/822 of 25 May 2018 (mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements) amends for the sixth time Directive 2011/16/EU on administrative cooperation in the field of taxation (“DAC 6”) and requires the disclosure of information relating to certain cross-border arrangements (“CBA”).
The main objective of DAC 6 is to strengthen tax transparency and prevent what are considered to be harmful tax practices through the automatic exchange of information between the EU Member States on potentially aggressive tax planning. The UK Regulations will require any CBA involving two countries, where at least one is an EU Member State (considered to include the UK) to be reported where it meets certain criteria (referred to as the “Hallmarks”) that could indicate aggressive tax planning – these are known as a reportable CBA, or “RCBA”. The obligation to disclose such an arrangement will be on an intermediary involved in the arrangement. Although classed as intermediaries, lawyers will usually be exempt from submitting a report due to legal professional privilege.
On 8 May 2020, in response to the global pandemic, the European Commission published a proposal to delay disclosure deadlines imposed by DAC6 by three months but it should be noted that the proposal only defers the reporting deadlines, the beginning of the application of DAC 6 remains 1 July 2020. Professional advisers will need to be alert to DAC6 and clients will notice amended terms of engagement and a new focus from the outset on these new compliance obligations as penalties for non-compliance can be up to £1 million in serious cases.
The new powers tackling promoters of avoidance schemes
Under new proposals in draft Finance Bill 2021, HMRC will have wider information powers and be able to impose tougher sanctions on those who continue to promote or enable tax avoidance schemes. Whilst a robust approach to tackle unacceptable behaviour by a minority of promoters is entirely welcome, the new rules would arguably impose unnecessary administrative burdens on those operating within the law.
Draft Finance Bill 2020–21—promoters and enablers of tax avoidance schemes
Helen McGhee, senior associate at Joseph Hage Aaronson LLP, shares her insights on the Draft Finance Bill 2020–21 and its impact on promoters and enablers of tax avoidance schemes.
Apple and Ireland Win €13bn State Aid Appeal
The General Court of the European Union has today annulled the Commission’s decision regarding two Irish tax rulings in favour of Apple. The Commission had considered that the two rulings constituted State Aid, granting Apple €13bn in unlawful tax advantages.
The Price of Property
Helen McGhee looks at the present state of UK tax rules that must be considered when owning and disposing of UK property.
Inheritance tax problems in Finance Bill 2020
The rules on excluded property trusts are due to change with effect from royal assent. These changes are complex, and the new rules can have an unexpected and retroactive effect. Emma Chamberlain explores these rules to determine whether it may be necessary to exclude the settlor going forward as a beneficiary.