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In brief

The so-called UK Mandatory Disclosure Rules (MDR) came into force in the UK on 28 March 2023. They comprise new cross-border tax avoidance arrangement disclosure rules that implement the OECD Model Mandatory Disclosure Rules.

This article appears in the second edition of the Private Wealth Newsletter 2023.

In more detail

Notably, the rules have global application, provided the taxpayer or their intermediary has a UK nexus and so are of considerable importance to many private clients who have implemented structures designed to protect their information from disclosure. Private clients and their advisers and other intermediaries should therefore consider the UK MDR carefully in the context of asset holding structures, including non-UK company, trust and other structures.

The new regulations are intended to replace the latest iteration of the DAC 6 rules, which were implemented in the UK. In-scope arrangements made available by intermediaries or implemented by taxpayers after 28 March 2023 must be reported to the UK tax authority, HMRC, within 30 days. Pre-existing arrangements will need to be reported within 180 days after the rules are implemented (i.e., by 25 September 2023). The look-back period for reporting pre-existing arrangements is 25 June 2018 (the same as DAC 6).

Scope of the rules

The scope of the UK MDR is limited to the two categories of arrangements described below. This reflects the way DAC 6 was implemented in the UK from 2021 whereby its application was limited to arrangements falling under Hallmark D of the EU Directive. However, the UK MDR extends the territorial scope such that certain arrangements that may not have been reportable under the UK DAC 6 regulations are reportable under the UK MDR. In particular, there will be no territorial limitations to the application of the UK MDR, resulting in in-scope arrangements and structures being reportable to HMRC, regardless of which jurisdictions are involved, as long as the intermediary or taxpayer has a UK nexus. A UK nexus may simply be where an intermediary provides services from a UK branch or office, or where the intermediary or taxpayer is tax resident in the UK. This will therefore be of particular note to international private clients who use UK-based advisers.

The new rules require intermediaries (for example, law firms or asset managers) that are incorporated, resident or have a place of management in the UK to make a report to HMRC with respect to one or both of the following if they make the structure or arrangement available for implementation or provide relevant services in relation to it through a branch or office located in the UK:

  1. “OECD Common Reporting Standard (CRS) avoidance arrangement”.
  2. Opaque offshore structure.

“CRS avoidance arrangement” 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.” There is an exemption from the look- back period in relation to CRS avoidance arrangements, where the amount involved is less than USD 1 million.

An opaque offshore structure is defined as being a passive offshore vehicle held through an opaque structure. This broadly covers entities that do not carry out any substantial economic activity supported by adequate staff in their country of residence and are designed to or have the effect of disguising or hiding the persons with beneficial ownership over it. Similarly, as under DAC 6, the question is whether beneficial ownership has been made “unidentifiable.” For these purposes, ownership does not need to be publicly available. Draft HMRC guidance confirms that ownership will not be made unidentifiable where the relevant tax authorities have mechanisms by which they can obtain this information. This should be carefully assessed on a case-by-case basis.

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 (but the taxpayer would be required to report).

How will this affect clients?

The introduction of the UK MDR is of particular importance to private clients and their structures, particularly given certain planning that may have been done in light of (often legitimate) concerns regarding the disclosure of beneficial ownership information in the public domain. However, clients need to be aware of potential reporting obligations on intermediaries or themselves (as reportable taxpayers), as well as the reporting obligations of intermediaries providing relevant services to them. Given the look-back period, it is important that all reporting obligations (even in respect of historic structures) are met by intermediaries and reportable taxpayers where appropriate.

Please click the link below for a more detailed overview of the new rules.

United Kingdom: Mandatory Disclosure Rules Come Into Force


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.

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