UK: DAC 6 Deferral

published on 29 July 2020 | reading time approx. 2 minutes

The economic disruptions of  the covid-19 pandemic and lockdown measures to the activities of many financial institutions, tax advisers and tax authorities have hindered timely compliance of reporting obligations.

The EU Council adopted an amendment to the DAC allowing member states an option to defer by up to 6 months the time limits for the filing and exchange of the following information:

• automatic exchanges of information on financial accounts of which the beneficiaries are tax residents in another member state;
• reportable cross-border tax planning arrangements.

The previous deadline for reporting cross border tax planning arrangements under DAC6 was 31 August 2020. However member states can now opt for a 6 months extension. In addition, depending on the evolution of the pandemic, the amended directive also allows the possibility for the Council to extend the deferral period for a maximum of three further months. Many of the member states have announced their adoption of the optional deferral.
 

Deferral in the UK

The UK has adopted the deferral of the first reporting deadlines under DAC6 by six months. This will provide taxpayers and intermediaries dealing with the impacts of the covid-19 pandemic with time to ensure that they can comply with their reporting obligations.

 
The following deadlines for reporting will now apply:

1. For arrangements where the first step in the implementation took place between 25 June 2018 and 30 June 2020, reports must be made by 28 February 2021, instead of by 31 August 2020 as originally required.
2. For arrangements which were made available for implementation, or which were ready for implementation, or where the first step in the implementation took place between 1 July 2020, and 31 December 2020, reports must be made within the period of 30 days beginning on 1 January 2021. Under the original rules, such arrangements would have had to be reported within 30 days of the reporting trigger point being reached.
3. For arrangements in respect of which a UK intermediary provided aid, assistance or advice between 1 July 2020 and 31 December 2020, reports must be made within the period of 30 days beginning on 1 January 2021. Again, under the original rules, such arrangements would have had to be reported within 30 days of the aid, assistance or advice being provided.
4. Arrangements which become reportable on or after 1 January 2021 must be reported as normal (i.e. within 30 days of a triggering event).
5. Where periodic reports are required in relation to marketable arrangements, the first such report must be made by 30 April 2021.

The UK Government will amend the Regulations to give effect to this deferral. The amended Regulations are unlikely to be in force by 1 July 2020, but HM Revenue & Custom have confirmed the deferral in the Guidance published on 1 July 2020 and that no action will be taken for non-reporting during the period between 1 July 2020 and the date the amended Regulations come into force. We will keep you updated on further details on DAC 6 reporting as per the newly published HMRC guidance.
 

Other Deferrals: VAT e-commerce

Member states' ambassadors to the EU reached a preliminary agreement on postponing by six months the application of the VAT regime applicable to online companies as 1 July 2021, instead of 1 January 2021. The postponement is expected to be formally adopted by the Council shortly.