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UK Government Finalises Mandatory Disclosure Rules

The UK Government has published the final version of regulations on 17 January 2023 that will give effect to the UK’s mandatory disclosure rules (“UK MDR”). The International Tax Enforcement (Disclosable Arrangements) Regulations 2023 (Statutory Instrument SI 2023/38) come a little over two years after the UK Government announced that it intended to replace the UK’s DAC 6 regulations with the Organisation for Economic Cooperation and Development (“OECD”) model mandatory disclosure rules (as previously covered here) as part of the UK’s departure from the EU. The UK MDR will come into force on 28 March 2023 and will apply to arrangements entered into on or after this date.

The UK Government consulted on draft regulations from November 2021 with the response to the consultation being published in November 2022. There were limited changes between the draft regulations and the final regulations. However, the most significant change in the final version of the regulations to implement the UK MDR is that the “look back” period  for reporting pre-existing transactions has been shortened from 29 October 2014 to 25 June 2018. This new date accords with the “look back” period under DAC 6. This amendment, together with an exemption for reporting during the “look back” period for transactions that have been reported under DAC 6 or, in relation to avoidance arrangements concerning the Common Reporting Standard (“CRS”) where the aggregate balance or value of the financial account subject to the CRS avoidance arrangement was less than US $1 million, should reduce the disclosures required to be made during the “look back” period.

As regards differences in the scope of the OECD MDR and DAC 6, it is also worth noting that the OECD MDR requires disclosure of certain arrangements that avoid reporting under the CRS as well as disclosure of opaque offshore structures that obscure beneficial ownership. This is broadly aligned with the reporting requirements under the “Category D” hallmark for UK DAC 6 purposes. However, one notable difference between the scope of the DAC 6 regulations and the OECD MDR is that the DAC 6 regime only requires reporting of arrangements that concern either the UK or an EU Member State, whereas the OECD MDR do not provide such a territorial restriction. However, a reporting obligation should only arise under the UK MDR where the relevant taxpayer or intermediary is, very broadly, in the UK. As such, the implementation of the UK MDR will likely be broadly aligned with the current position under the UK DAC 6 rules in practice.

As regards transitional arrangements, HMRC are expected to keep the DAC 6 reporting portal open until the end of April 2023 to allow arrangements entered into before the new rules take effect to be reported under DAC 6.

While the changes to the UK’s MDR have been anticipated for some time now, the publication of the final regulations is welcome insofar as they provide clarity around the UK’s position.

Key Contacts

Linda Z. Swartz
T. +1 212 504 6062


Adam Blakemore
T. +44 (0) 20 7170 8697

Jon Brose
T. +1 212 504 6376

Andrew Carlon
T. +1 212 504 6378

Mark P. Howe
T. +1 202 862 2236

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