DAC6 Update: final implementation of EU mandatory disclosure reporting regulations published

DAC6 Update

Final regulations for the implementation of DAC6 have been published.

Janette Wilkinson


KPMG in the UK


Also on home.kpmg

On 13 January 2020 the final UK regulations for the implementation of the EU Directive on Administrative Cooperation in the field of taxation (DAC6) were issued alongside HMRC’s official response to the consultation previously published in July 2019. The regulations come into force on 1 July 2020 and aim to ensure that HMRC are provided with early information about cross-border arrangements which contain certain features, or ‘hallmarks’, which the EU view as representing potentially aggressive tax planning.

The final regulations follow the release of draft regulations and the aforementioned consultation process, key themes of which were the potential for duplicate reporting, how the regulations will apply in instances of legal professional privilege, the penalty regime, and a general desire for further guidance on when an arrangement might be reportable and by whom. A number of queries around the impact of Brexit were also raised.

The main updates to the regulations and HMRC’s official response to the consultation are discussed below. 

Overall reduction in territorial scope – The regulations introduce new definitions of ‘UK intermediary’ and ‘UK relevant taxpayer’ to ensure that the rules do not apply to intermediaries without a connection to the UK. This is in-line with the intention of DAC6 and should in principle reduce the overall reporting burden.

Territorial scope of ‘tax advantage’ – The regulations have been amended in order to limit the territorial scope of tax advantages to those relating to taxes within the scope of DAC6 – i.e. direct taxes arising in EU Member States. However, in determining whether an EU tax advantage has arisen, arrangements may still need to be looked at as a whole which could in turn require non-EU tax advantages to be considered.

Elimination of duplicate reporting – Although HMRC have acknowledged that some duplicate reporting of arrangements is inevitable, the regulations have been amended to ensure that the same intermediary does not have an obligation to report in multiple jurisdictions. In addition, HMRC have advised that their guidance will seek to reduce duplicate reporting in other circumstances. For example, secondary intermediaries (i.e. service providers) may essentially be able to assume that a report filed by a primary intermediary (i.e. promoter) includes all of the information that they would need to report, as long as they have evidence that such a report was made.

Legal Professional Privilege (LPP) – The regulations have been amended to ensure a disclosure that would breach LPP does not have to be made. In line with DAC6, the obligation to report should in principle be passed on to another intermediary or relevant taxpayer to whom LPP does not apply.

Penalties and governance – There is a fixed penalty of £5,000 for failure to comply in many cases, and daily penalties of £600 which should in principle only be charged in the instance of a serious failing, such as where the behaviour leading to the failure was deliberate. Penalties may be cancelled if there is a reasonable excuse. The possibility for the Tribunal to increase penalties up to £1 million remains.


The final regulations do not directly take account of the fact that the UK should soon cease to be a Member State of the EU.  However, in the consultation response HMRC have confirmed that, under the terms of the Withdrawal Agreement, the UK is legally obliged to implement DAC6 prior to the date that the UK leaves and during the subsequent Implementation Period.  It remains to be seen how this might change, given the uncertainty surrounding the precise nature of the UK’s future relationship with the EU.

If you would like to discuss the new regulations and the potential impact of the updates, do not hesitate to get in touch with us.

For further information please contact:

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