UK regulations made to implement the EU mandatory disclosure rules - reporting requirements for intermediaries


On 9 January 2020, the International Tax Enforcement (Disclosable Arrangements) Regulations 2020, Statutory Instrument 2020 No. 25 (the Regulations) were made. The Regulations implement EU Directive 2018/822 (known as DAC 6) into UK law.

From 1 July 2020, DAC 6 and the Regulations will require intermediaries involved in designing and promoting certain cross-border arrangements satisfying hallmarks linked to tax or tax reporting to make a report of those arrangements to HM Revenue and Customs (HMRC).

This will have important reporting and compliance implications for solicitors who advise on cross-border arrangements.

While the rules were introduced to tackle aggressive tax planning, they apply more broadly. Members who do not advise on tax issues should therefore be aware that the rules may apply to them.


The government consulted on a draft of the Regulations over summer 2019.

Our response to the consultation (344 KB) urged the government to take a proportionate approach to transposing the directive into UK law and provided detailed comments on issues that should be addressed by the regulations to achieve that.

Consultation outcome

On 13 January 2020, HMRC published a summary of responses to the consultation.

The summary of responses and changes to the Regulations recognise several points raised by our consultation response, including:

  • changes to help safeguard legal professional privilege (LPP) – see below
  • amendments to the penalty regime
  • a limit on the definition of “tax advantage” to cover only taxes covered by the Directive

We welcome the positive changes that have been made to the Regulations as well as HMRC’s commitment to continue to work with stakeholders to draft the detailed HMRC guidance. The guidance will be published before the Regulations come into force in July 2020.

Interaction with LPP

The Regulations include (at Regulation 7) an improved exception for an intermediary where the relevant information would be subject to LPP. The government agreed with the Law Society and other stakeholders that the rules as originally drafted could cause difficulties in ensuring that LPP was not breached.

HMRC will continue to work with representatives from the legal sector to provide guidance on how the rules will operate.

Read more about implications LPP has on reporting under DAC 6

Next steps

We will continue to engage with members and with HMRC about how the Regulations will operate in practice, including how LPP interacts with DAC 6 and the Regulations.

We recommend that members continue to review, monitor, and record relevant reportable arrangements under DAC 6 and the Regulations in respect of which the first implementation step has taken place since 25 June 2018. Intermediaries will have to report during July and August 2020 on any such arrangements where the first implementation step has been taken between 25 June 2018 and 1 July 2020.

Members may also wish to consider their internal processes to ensure that they can be compliant with the Directive and Regulations going forwards.

Background and further information

The Directive

The Directive on Administrative Co-operation (DAC 6) requires intermediaries (including lawyers) to report certain cross-border arrangements to tax authorities of EU member states. Those tax authorities will then exchange relevant information with each other on a quarterly basis.

The UK Regulations made on 9 January 2020 implement the rules in the Directive into UK law. Importantly, the reporting obligations under DAC 6 and the Regulations are backdated to 25 June 2018.

Purpose of the Directive

The primary purpose of the Directive is to deter intermediaries and users of potentially aggressive tax planning schemes from promoting and using such schemes.

What transactions do the rules apply to?

The Directive and the Regulations apply to “reportable cross-border arrangements”. A cross-border arrangement is one that involves a participant in an EU member state and is not purely domestic. Reportable cross-border arrangements are broadly defined, which means that the Directive may have consequences for non-tax driven transactions.

The Directive sets out a series of 'hallmarks' representing distinctive elements linked to tax and tax reporting, which, if applicable, render the arrangement reportable.

Some of the hallmarks require the transactions to have a main benefit of obtaining a tax advantage. However, many of them do not, and could apply to commercial transactions with no tax motivation.

The hallmarks are contained in Annex IV to the Directive which is applied in the UK in accordance with Regulation 12.

When do they apply?

The Regulations come into force on 1 July 2020, but they have consequences now. This is because intermediaries will have to report by the end of August 2020 on any arrangements where the first step has been taken after the Directive came into force on 25 June 2018.

Who does it apply to?

The Directive applies to any intermediary that designs, markets, organises or makes available for implementation, or manages the implementation of, a reportable cross-border arrangement. It also covers those who provide aid, assistance or advice where they can be reasonably expected to know that this is what they have done.

The definition of intermediary is subject to an exception for employees where the employer is an intermediary (see Regulation 13). However, this exception does not cover all individuals who work in organisations that are intermediaries. For example, partners in partnerships can be intermediaries (although the summary of responses document indicates that partnerships will be able to make reports on behalf of partners who would otherwise have to report separately).

Under the Directive, if the intermediary is located outside the EU or is subject to professional privilege or other secrecy rules, the obligation to report the arrangement passes to the taxpayer who benefits from the scheme. In instances where there is no intermediary (ie where the scheme is designed in-house), the taxpayer will still be obliged to report the arrangements to HMRC.

How do the rules work in practice?

The rules will cover any cross-border arrangement if it bears the 'hallmarks' defined in the Directive and the Regulations. The intermediary is required to report to the relevant tax authority within 30 days of when the arrangement is made available, is ready for implementation or has been implemented – whichever occurs first, or of when the aid, assistance or advice is provided.

The Directive states that intermediaries will have to report information which is in their knowledge, possession or control.

What information should be reported?

Each member state will agree the scope and format of the information to be reported to its respective tax authority. However, basic information for reporting purposes will include:

  • the identification of intermediaries and relevant taxpayers, including their name, date and place of birth (in the case of an individual), residence for tax purposes, tax identification number (TIN) and, where appropriate, the persons that are associated enterprises to the relevant taxpayer
  • the hallmark(s) that gives rise to the reporting obligation
  • a summary of the arrangement(s), including start dates and any domestic tax rules applicable
  • the value of the reportable cross-border arrangement
  • a description in abstract terms of the relevant business activities involved (some protection given to specific information)
  • details of the other member states involved, or likely to be concerned by the arrangement, and the person in them that may be affected

The UK regulations provide for the information to be reportable to HMRC and require that the report must be made electronically using an electronic return system to be specified by HMRC.

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