Policy paper

International Tax Enforcement disclosable arrangements

Published 6 July 2018

Who is likely to be affected

This measure provides powers in legislation for HM Treasury to make regulations to require certain information to be notified to HMRC by individuals and businesses. Those regulations will have an impact on individuals and businesses.

General description of the measure

This measure provides legislation to allow regulations to be made to give effect to international rules on the disclosure of cross border tax arrangements.

Powers are provided to:

• implement a new EU directive (Directive 2018/822 which amends Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements)
• implement the new Organisation for Economic Co-operation and Development (OECD) model mandatory disclosure rules, which the EU Directive largely mirrors, should the government decide to implement those

The Directive requires information about certain cross border tax planning arrangements to be notified to EU member states’ tax administrations. The information collected will be automatically shared between all EU member states.

The government will consult in 2019 on the regulations. In the interim, informal consultation is ongoing and HMRC will set up a working group for affected businesses and representative bodies to discuss issues with HMRC.

This legislation permits modification of other legislation. No decisions have been taken on how any new legislation would interact with existing legislation, and this will be consulted on. Some parts of the Directive are already subject to DOTAS (the Disclosure of Tax Avoidance Scheme rules at Part 7 Finance Act 2004 and in the relevant regulations) so this legislation enables consequential amendments to be made, should it be considered appropriate to do so, to ensure that all the legislation operates seamlessly together.

Policy objective

This measure will enable the government to better tackle tax evasion and avoidance by requiring the disclosure of aggressive tax planning arrangements.

The measure will support the government’s consistent action to tackle aggressive tax planning, avoidance and evasion. The UK government has spearheaded international efforts to improve tax transparency, and has been at the forefront of the development of these new rules, working closely with other countries to ensure that they are well targeted and will be effective. The rules will make it harder for people to hide their money from HMRC to avoid or evade paying the tax that they owe, and will help HMRC to enforce existing law.

The rules, when implemented, will give HMRC and other tax administrations access to early, useful information about taxpayers, intermediaries who provided services in connection with these arrangements, their activities in other countries, and the types of cross border arrangements that are entered into. The rules will help control and disrupt cross border tax avoidance and evasion which relies on secrecy.

On 23 June 2016, the EU referendum took place and the people of the UK voted to leave the EU. Until exit negotiations are concluded, the UK remains a full member of the EU and all the rights and obligations of EU membership remain in force. During this period the government will continue to negotiate, implement and apply EU legislation. The outcome of these negotiations will determine what arrangements apply in relation to EU legislation in future once the UK has left the EU.

Background to the measure

The response to HMRC’s 2017 consultation ‘Tackling offshore tax evasion: A requirement to notify HMRC of offshore structures’ was clear that HMRC should not undertake this work alone, but should work cooperatively with other countries to apply rules in a consistent and fair way internationally. The UK government proceeded to work closely with international partners.

The EU proposed the Draft Directive on 21 June 2017. The new Directive 2018/822 amends Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements. The Directive came into force on 25 June 2018. The OECD published its report: Model Mandatory Disclosure Rules for CRS Avoidance Arrangements and Opaque Offshore Structures on 9 March 2018.

The UK will bring forward legislation to implement the Directive by 31 December 2019.

Draft legislation was published for consultation on 6 July 2018.

Detailed proposal

Operative date

This enabling legislation will have effect on and after the Royal Assent to Finance Bill 2018-19.

Current law

This is a completely new provision.

Proposed revisions

Legislation in Finance Bill 2018-19 will introduce a power to enable the Treasury to enact regulations to require persons to notify certain cross border arrangements to HMRC. This will be a stand-alone provision in FA 2019.

The power permits the regulations to require persons to notify information in a form and manner and at such intervals as are specified by the regulations, about arrangements entered into before the coming into force of the legislation, to modify existing legislation, to provide for penalties, and to make different provision for different purposes.

Until secondary legislation is implemented there will be no change to the law for individuals and businesses.

Summary of impacts

A tax information and impact note will be published for the subsequent regulations which will set out their impact.

Exchequer impact (£m)

2018 to 2019	2019 to 2020	2020 to 2021	2021 to 2022	2022 to 2023	2023 to 2024
nil	nil	nil	nil	nil	nil

This measure is not expected to have an Exchequer impact.

Economic impact

This measure is not expected to have any significant economic impacts.

Impact on individuals, households and families

No individuals are affected by this measure.

The measure is not expected to impact on family formation, stability or breakdown.

Equalities impacts

This measure has no equality impact.

Impact on business including civil society organisations

This measure is expected to have no impact on businesses or civil society organisations.

Operational impact (£m) (HMRC or other)

This measure has no operational impact.

Other impacts

Other impacts have been considered and none have been identified.

Monitoring and evaluation

This measure will be kept under review through communication with affected taxpayer groups.

Further advice

If you have any questions about this change, contact Helen Baird-Parker on telephone: 03000 586141 or email: helen.baird-parker@hmrc.gsi.gov.uk.