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In brief

Cross-border tax avoidance arrangement disclosure rules implementing OECD Model Mandatory Disclosure Rules referred to as “UK MDR” have come into force in the UK on 28 March 2023. In-scope arrangements entered into on or after this date must be reported to HMRC.

Here’s what you need to know.

In Summary

On 31 December 2020, the government took steps to narrow the scope of mandatory reporting in the UK under the EU’s “DAC6” rules (Council Directive (EU) 2018/822). As a result, in the UK, only cross-border arrangements falling under the Category D DAC6 hallmarks have been reportable since 1 January 2021. Broadly, those that have the effect of:

  • circumventing the OECD’s Common Reporting Standard (CRS); or
  • obscuring beneficial ownership and involving the use of offshore entities and structures with no real substance.

The amendment to the UK DAC6 regulations passed by The International Tax Enforcement (Disclosable Arrangements) Regulations 2020 was intended as a temporary step, with the government intending to introduce, and consult on, legislation to implement mandatory reporting under the OECD Model Mandatory Disclosure Rules for CRS Avoidance Arrangements and Opaque Offshore Structures.

This process has taken longer than anticipated, however, The International Tax Enforcement (Disclosable Arrangement) Regulations 2023 (“the Regulations”) were passed in January 2023 and come into effect on 28 March 2023 implementing this change. The International Tax Enforcement (Disclosable Arrangements) Regulations 2020 will be repealed with effect from the same date.

The scope of the Regulations is more limited than under the original UK DAC6 regulations and will only apply to the two categories of arrangements described below. Helpfully lookback periods are not extended. However provisions regarding UK nexus mean that certain arrangements that may not have been reportable under the UK DAC6 regulations are reportable under UK MDR.

In depth


Despite the efforts of the international community to tackle offshore tax evasion, tax authorities maintain that they have continued to find evidence of arrangements and structures being designed to facilitate 

non-compliance, including through the use of opaque offshore structures, and through arrangements designed to circumvent transparency initiatives such as the CRS.

In response to this, the OECD developed the MDR, published in 2018. These rules require taxpayers and advisers to report information to the tax authorities on certain prescribed arrangements and structures which could facilitate tax evasion. Tax authorities in implementing jurisdictions will then share this information with the tax authorities of the jurisdiction where the taxpayer is resident.

At Spring Budget 2021, the government announced that it would implement the MDR in the UK. The rules are intended to replace DAC6, which was implemented in the UK prior to our exit from the EU through the International Tax Enforcement (Disclosable Arrangements) Regulations 2020 and were broad in their scope. At the end of the transition period following EU exit, the government amended those regulations to ensure the rules remained operative from 1 January 2021, and to align them more closely with the OECD’s model rules, but with effect only to cross-border arrangements designed to undermine tax reporting under CRS and the use of opaque offshore structures (as set out above and below). Those amendments were made in the International Tax Enforcement (Disclosable Arrangements) (Amendment) (No. 2) (EU Exit) Regulations 2020.

The government then published a draft version of The International Tax Enforcement (Disclosable Arrangements) Regulations 2022 on 30 November 2021, alongside a consultation document setting out details of the government’s proposed approach to implementation. These regulations would implement MDR, meaning the rules apply at a global rather than European level following EU exit. Given the similarities between UK MDR and DAC6, HMRC proposed to take a similar approach to interpretation of MDR as it took for DAC6. This approach is intended to reduce the burden on businesses in moving to reporting under UK MDR. Following this, the Regulations were passed in January 2023 and come into force on 28 March 2023.


The Regulations require an intermediary (that is incorporated, resident or has a place of management in the UK) to make a report to HMRC with respect to a CRS avoidance arrangement or opaque offshore structure where:

  • the arrangement or structure is made available for implementation; or
  • relevant services are provided in respect of that arrangement or structure through a branch or office located in the UK.

In certain circumstances the reporting obligation will fall on a “Reportable Taxpayer”, that is, a taxpayer resident in the UK and a user of a CRS avoidance arrangement or a beneficial owner under an opaque offshore structure. 

Accordingly, the scope of the Regulations is more limited than under the original UK DAC6 regulations or those applicable in the EU, and will only apply to the arrangements described above (which are discussed in further detail below). However, there is an extension to the territorial scope. The DAC 6 rules applicable in the UK only required reporting of arrangements that ‘concern’ either the UK or an EU Member State. The new rules do not include this territorial restriction, although a reporting obligation should only arise to a person with a relevant link to the UK. This means that UK-based intermediaries, such as lawyers or accountants, may be required to report arrangements under UK MDR that are wholly outside of the UK or EU, whereas they would not have done under DAC6. Whilst it seems HMRC wish to keep the interpretation of UK MDR as close to DAC 6 as possible, this does expand the population of arrangements which need to be considered.

CRS avoidance arrangements

“CRS avoidance arrangements” are defined in rule 1.1 of the MDR. This definition captures any arrangement “for which it is reasonable to conclude that it is designed to circumvent or is marketed as, or has the effect of, circumventing CRS Legislation or exploiting an absence thereof”. The MDR go on to list a series of examples of how an arrangement could seek to circumvent the CRS, including the use of non-reportable accounts or arrangements involving jurisdictions that do not exchange CRS data. The list is not exhaustive, to ensure that newly developed arrangements are still caught. The MDR go on to make clear that an arrangement will not be a CRS avoidance arrangement solely because it results in non-reporting under the CRS, if it is reasonable to conclude that such non-reporting does not undermine the policy intent of CRS legislation.

Opaque Offshore Structures

An opaque offshore structure is defined in rule 1.2 of the MDR as being a passive offshore vehicle held through an opaque structure. A passive offshore vehicle is defined as being “a legal person or legal arrangement that does not carry on a substantive economic activity supported by adequate staff, equipment assets and premises, in the jurisdiction where it is established or is tax resident”. This is subject to certain exceptions. An opaque structure is a structure that it is reasonable to conclude “is designed to have, marketed as having, or has the effect of allowing, a natural person to be a beneficial owner of a passive offshore vehicle, while not allowing the accurate determination of such person’s beneficial ownership, or creating the appearance that such person is not a beneficial owner”. A non-exhaustive list of examples of how this could be met, including through use of nominees or indirect control, is included at rule 1.2.


The ‘look back’ period for reporting pre-existing arrangements, initially stretching back to 29 October 2014, has been revised to 25 June 2018 (the same as under DAC 6) – a welcome change from the original draft of the implementing regulations.

Any reportable arrangements that are made available by intermediaries or implemented by taxpayers after 28 March 2023 will need to be reported within 30 days of this happening. Pre-existing arrangements will need to be reported within 180 days after the rules are implemented (i.e. by 25 September 2023).

There is an exemption to the look back period in relation to CRS avoidance arrangements, where the amount involved is less than US$1m. In addition, an exemption applies where relevant information has already been provided under DAC 6 and an intermediary is not required to disclose any information to the extent it is subject to legal professional privilege.

As with the existing DAC6 reporting framework, reporting to HMRC will be done using XML software. HMRC’s reasoning is that XML is the commonly agreed method for international automatic exchanges of information including the CRS, but the requirement will mean taxpayers and advisers may need to revisit internal processes and software options.

Next Steps

HMRC envisage that generally its guidance on the Regulations will be similar to existing DAC6 guidance, except where changes are necessary to ensure alignment with the OECD MDR model rules, or to address any gaps in the existing guidance. HMRC has already published some high-level guidance on the reporting cross-border arrangements under the Regulations on 3 February 2023 and is in the process of adapting existing guidance in the International Exchange of Information Manual at IEIM600000 onwards to reflect the adoption of the new regulations. We are reviewing and commenting on HMRC’s draft revised guidance, a final version of which will be published later this year.

What does this mean for clients?

The introduction of UK MDR may be of more limited application to multinational groups and they are unlikely to need to same systems and processes to manage reporting of their arrangements. It is of particular importance to clients and their closely held structures. However, intermediaries and potentially impacted taxpayers need to be aware of reporting obligations and the types of structures that might give rise to reporting. Given the look-back period, it is important that all reporting obligations (even in respect of historical structures) are met by intermediaries and Reportable Taxpayers where appropriate.

Please get in touch with your regular Baker & McKenzie contact or the contacts listed with any questions on the scope and application of the new UK MDR.


Oliver Pendred is a partner in Baker McKenzie's tax practice in London. He is a chartered accountant and chartered tax adviser providing corporate and international tax advice to multinational clients. Prior to joining Baker McKenzie, he was a director at a Big Four accounting firm.


Phyllis Townsend is Partner in the Wealth Management practice in London, Chair of the EMEA Wealth Management Steering Committee and a member of the Firm's Global Wealth Management Steering Committee. Phyllis works with clients on a broad range of wealth management matters, including those with a particular focus on investment structuring. Phyllis is listed in Chambers HNW Guide, Legal 500 and Legal Week's "Private Client Global Elite - Ones to Watch". Phyllis is a member of the Founding Committee of Thought Leaders 4 Private Client Next Gen Wealth. Phyllis joined in 2012 from Rothschild Wealth Management & Trust where she was legal counsel in London and Zurich.


Pippa Goodfellow is an associate in Baker McKenzie's Global Wealth Management practice. Pippa works closely with ultra-high-net worth individuals, leading entrepreneurial families and financial institutions on a broad range of wealth management matters. Pippa advises on a range of private client issues, including UK taxation, asset protection, trusts and succession planning. The majority of her work has an international element and involves cross-border issues.
Pippa has written for leading publications, including the Tax Journal and Private Client Business and has spoken at conferences in London and Luxembourg. She trained and worked at a leading city firm for five years before joining Baker McKenzie in November 2022.


Holly Bradley is a Senior Knowledge Lawyer in Baker McKenzie, London office.

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