05 January, 2021
While most of us were enjoying a little R&R over the festive period, HMRC were evidently particularly hard at work amending their approach to DAC6 in light of the concluded negotiations between the UK and the EU on the Trade and Cooperation Agreement (TCA).
Issuing a letter to professional bodies on 31 December 2020, HMRC advised that:
The category D hallmarks are those aligned to the OECD’s MDR, applying to CRS avoidancearrangements and opaque ownership structures. With Guernsey and Jersey having adopted theOECD’s MDR, this should be a welcome development for CI-based businesses in providinggreater scope to align policies and procedures to ensure compliance with both local MDR andEU DAC6.
Additionally, we've confirmed with HMRC that, for the transition period between 25 June 2018 and 30 June 2020, and the period from 1 July to 31 December 2020, reporting will only berequired for those arrangements meeting a category D hallmark.
However, there remain some challenges which require consideration:
More broadly, it is interesting to note that the TCA requires that:
“[a] Party shall not weaken or reduce the level of protection provided for in its legislation at theend of the transition period below the level provided for by the standards and rules which havebeen agreed in the OECD at the end of the transition period, in relation to ... the exchange ofinformation [or] … rules on interest limitation, controlled foreign companies and hybridmismatches”.
Should you require any more information or assistance, please get in touch with any of the individuals listed below, or your normal PwC contact in our Channel Islands tax team.