Mandatory Disclosure Rules: Proposed Regulations – Law Society Response


HM Revenue and Customs (HMRC) is seeking advice on the design of draft regulations which would replace DAC 6 and require disclosure of certain provisions to HMRC.

This draft regulation is intended to implement the OECD Model Mandatory Disclosure Rules for Joint Reporting Standards Avoidance Agreements and Secrecy Offshore Structures.

They replace similar existing European rules introduced previously (as part of the directive known as DAC 6).

The rules require taxpayers and intermediaries to disclose information about these types of arrangements to HMRC.

Our point of view

Part of the proposal is that there would be an obligation to declare pre-existing agreements dating back to 2014. We think this should be reconsidered.

It would require law firms and other businesses to perform internal due diligence and review records going back eight years.

This would apply to law firms that have already recently conducted similar reviews dating back to 2018 to comply with DAC 6.

This new retrospective review would be costly and practically difficult, and we question whether it is necessary and proportionate.

We also make several other representations on the detailed design of the rules, to try to make it easier for members to implement them in practice, including how the rules interact with legal privilege.

What this means for lawyers

The regulations will require intermediaries, which may include solicitors, to send information to HMRC on defined categories of arrangements and structures that must be reported.

Lawyers will therefore need to identify the situations where they have an obligation to report.

Although the proposed new rules have similarities to the current CAD 6 requirements that they will replace, they will not be identical.

It may therefore be necessary for law firms to update internal processes and guidelines to support compliance with the new rules.

If the requirement to report pre-existing agreements through 2014 is implemented, law firms may also need to run a retrospective review process.

Next steps

The consultation closed on February 8, 2022.

The government will review the proposed regulations in light of the responses received and modify them as necessary.

The final regulations will then be tabled in parliament and the government expects them to come into force in the summer of 2022.

Read the consultation on the GOV.UK website