The European Commission has published a proposal to postpone the requirement to make first reports under DAC 6 by three months.
In doing so, the proposal recognises the disruptive effects of the coronavirus (COVID-19) pandemic on businesses and tax administrations.
Assuming this proposal is accepted by the EU Council and brought into EU and UK law, it will push back the deadline for submitting first reports under DAC 6 to:
- 30 November 2020 for 'historic' pre-existing transactions (arrangements that became reportable from 25 June 2018 to 30 June 2020) and
- the end of October for reporting new transactions (cross-border arrangements from 1 July 2020 to 1 October 2020)
The proposals also include a power for the Commission to defer commencement by a further three months should the current exceptional circumstances persist.
By way of background, DAC 6 is EU Directive 2018/822 that introduces new disclosure and reporting rules for intermediaries involved in designing and promoting cross-border schemes that have certain hallmarks related to tax and tax reporting.
We asked HM Revenue and Customs (HMRC) whether they would consider deferring DAC 6 commencement.
Our expressed view is that there’s a strong case for deferral of DAC 6 in current circumstances, given the burden it’ll place on both private and public sectors (including law firms) so we welcome the European Commission’s proposals.
In another development, HMRC has produced additional guidance to provide clarity on how the concept of reasonable excuse will apply to the UK Regulations implementing DAC 6.
It says that because of the COVID-19 situation, HMRC accepts that any taxpayer or intermediary who makes a report late because of these difficulties will have a reasonable excuse (and so will not be liable to any penalties for that delay) provided the report is made without unreasonable delay after those difficulties are resolved.
If you believe that you'll be unable to meet your reporting obligations, you should keep a contemporaneous record of the difficulties you made and remediation plans.
If you have a customer compliance manager (CCM) in HMRC, you should contact your CCM in advance to agree an action plan, including estimated revised filing dates.
Read more about DAC 6