A&M Taxand Scotland Asset Managers Briefing Note: Volume 6
Volume 6: September 2020
Introduction to A&M TAXAND Scotland’s newest team member, guidance on DAC 6 implementation and reporting and the Scottish Government's recent consultation on Scottish taxes.
Welcome to our September edition of the A&M Taxand Scotland Asset Managers Briefing Note!
Introduction to A&M Scotland’s newest team member
We are delighted to welcome a new member to our team in Glasgow this month, Shirley McCaig, who will expand our private client services and capabilities.
Shirley joined A&M Taxand in Glasgow on 7 September 2020 to assist with all aspects of UK personal tax compliance matters.
Shirley has more than 20 years’ experience in advising private clients on UK tax matters. Prior to joining A&M Shirley spent two years in the High Net Worth team at Deloitte, specialising in UK compliance work within private client services. Previously, she has worked as a self-employed consultant with a particular focus on tax investigations. Shirley is also a tutor at the University of Strathclyde on the Law School Diploma programme.
Guidance on DAC 6 implementation and reporting
In May 2018, the ECOFIN Council adopted Council Directive (EU) 2018/822 (“DAC 6”), which amends Directive 2011/16/EU by introducing a mandatory and automatic exchange of information obligation in the field of taxation in relation to reportable cross-border arrangements. These are arrangements that concern more than one EU country or an EU country and a third country. For this purpose, the UK is still within the scope of the rules. DAC 6 imposes on intermediaries the obligation to report cross-border arrangements that meet at least one of the hallmarks specified in the Directive.
The categories of hallmarks are listed below:
- Generic hallmarks linked to the main benefit test;
- Specific hallmarks linked to the main benefit test;
- Specific hallmarks linked to cross-border transactions;
- Specific hallmarks concerning automatic exchange of information and beneficial ownership;
- Specific hallmarks concerning transfer pricing.
DAC 6 is widely drafted with certain hallmarks being subject to a main benefit test, where one of the main benefits of the arrangement is the obtaining of a tax advantage, whilst others do not have this main benefit test.
Member states have enacted DAC 6 into their local legislation with the rules taking effect from 1 July 2020. However, the rules will apply retrospectively to cross border arrangements which meet the disclosure conditions and are implemented from 25 June 2018 onwards. Therefore, it will apply to arrangements implemented since 25 June 2018 with the first reporting due by 28 February 2021 (delayed from 31 August 2020 due to Covid-19). For arrangements which were made available for implementation, or which were ready for implementation, or where the first step in the implementation takes place between 1 July 2020 and 31 December 2020, reports must be made within the period of 30 days beginning on 1 January 2021. Reportable arrangements from 1 January 2021 must be reported within 30 days of the earlier of; the date when the arrangement is made available, the date it is ready for implementation or the date when the first step is implemented.
Should there be a reporting obligation, the information to be reported includes details of the taxpayers and intermediaries, an outline of the arrangements and date of first implementation, relevant local law and applicable hallmarks, identification of the member states that the arrangements affect or relate to and the value of the arrangements. It should be noted that the information reported will be exchanged between the relevant member country tax authorities.
Under certain circumstances, the obligation to report the arrangements may rest with the taxpayer e.g. where the relevant intermediary is subject to legal professional privilege.
Call for evidence – Scottish Government consultation on Budget 2021/22: Supporting the Covid-19 Recovery
On 3 September 2020, the Scottish Government opened a consultation and call for evidence in advance of the Scottish Budget for 2021/22 to seek views on the role of Scotland’s devolved taxes and Fiscal Framework to support the Covid-19 economic recovery.
The call for evidence has been split into two sections and has requested views on the following set questions:
- Tax policy
- How should the Scottish Government use its devolved and local tax powers to support the Covid-19 recovery as part of Budget 2021/22;
- Are there any further tax powers that should be devolved to the Scottish Parliament to facilitate our ability to support the economic recovery; and
- Are there any new tax proposals you would like to see implemented by the Scottish Government?
- Fiscal Framework
- What particular fiscal challenges have been highlighted as a result of the Covid-19 emergency;
- What changes, if any, should be made to the scope of devolved fiscal powers under the Fiscal Framework; and
- What fiscal rules should the Scottish Government follow?
A&M intends to submit a response to the consultation in advance of the deadline on 8 October 2020. If you have any proposals which you would like us to include in our submission, please send them in an email to Jordan at jordan.brown@alvarezandmarsal.com.
