The DAC, pushed back

DAC6 is an EU initiative, in which the UK is participating, requiring certain cross-border arrangements to be reported to HMRC.  The first reports under this new regime were originally due by 31 August 2020 but it has now been confirmed that the UK Government is deferring the first reporting deadlines under DAC6 by six months. 

This comes after the proposal for a postponement was tabled by the EU Commission. The purpose of this delay is to allow additional time to analyse and report cross-border arrangements considering the impact of the Covid-19 pandemic. This postponement will now be enshrined in UK law, following an amendment to the UK Regulations. The amendment to the rules may not actually be in force by 1 July 2020, the original commencement date of the legislation, but HMRC has stated that no action will be taken for non-reporting before the amended Regulations come into force.

But what does this mean in practice? 

Intermediaries may still choose to press on with their own internal deadlines, especially given the risk of further changes in business continuity over the coming months. Hopefully the additional time will be used wisely for HMRC to work with stakeholders, refine its internal guidance and clarify its stance on aspects of the legislation that are contentious or difficult.  This includes the key issue of whether any reporting will be required by law firms, in the normal case where communications between the law firm and its client are covered by legal professional privilege.

The new deadlines can be found on the HMRC page, and reflect a postponement of 6 months for all relevant reporting deadlines - including the reporting for the look-back period which was originally due by 31 August 2020. HMRC will not be switching on the IT reporting system on 1 July, but it will be available ahead of the new, deferred deadlines. 

On-going requirements

It will still be very important for intermediaries to have procedures and policies in place for reporting, so the delay should not mean that this falls to the bottom of the agenda. The ongoing reporting requirement will still kick in on 1 July for reportable arrangements which take place from that date. The difference will be the reporting deadline, e.g. reportable arrangements implemented in August must be reported by the end of January 2021 rather than within 30 days of the reporting trigger. Therefore, although actual reporting this summer will no longer be necessary, the same assessments should be made and records should be kept until the HMRC portal for reporting is made available. Then, arrangements which become reportable on or after 1 January 2021 must be reported within the 30 day period referred to above.