March 28, 2023 is the commencement date that has been set for the new rules requiring financial intermediaries to report arrangement to avoid international exchange of information under the OECD Common Reporting Standard (CRS), and other opaque offshore structures used to conceal beneficial ownership.
The final form of the rules was released in November 2022, following a consultation earlier in the year. They are based on the existing reporting obligations based on the sixth version of the EU Council Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC6).
Reporting obligations and fixed deadlines for reports to be made are set out in the statutory instrument implementing the regulations. The instrument also provides penalties for non-compliance, along with rights of appeal.
The DAC6 regulations will remain in force until that date, when they are simultaneously repealed by the same statutory instrument, after which arrangement will not be reportable under DAC6. However, the DAC6 reporting portal will remain open for one month to allow arrangements entered before 28 March 2023 to be reported. Any arrangement entered from the 28th of March must be reported to HMRC under these rules.
HMRC will exchange information on these arrangements with other tax authorities where the taxpayers concerned are resident.
The switching to a new set of rules will mostly affect the 5.500 businesses who undertake cross-border arrangement om behalf of their clients. The Department of the Treasury has not yet been able to estimate the cost of this change of rules.
Intermediaries will usually have the reporting obligation so individuals would have to report in bery limited circumstances. Individuals who do enter into reportable arrangement and have to report themselves will need to buy software to produce files that can be uploaded on the HMRC reporting portal.
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