Nevertheless, the organisations most affected by the rules (typically professional advisers and financial sector firms) will need to ensure that their processes are consistent with the revised scope and will also want to take advantage of the opportunity arising from the redesign to address issues that arose in the first year of application of the existing system. 4.4.1 An opaque offshore structure is defined in regulation 1.2 of the Model Regulations as a passive offshore vessel maintained by an opaque structure. A passive offshore vessel is defined as “a legal person or legal arrangement that does not carry out any substantial economic activity in the territory in which it is established or resident for tax purposes, supported by adequate personnel, equipment and premises”. For persons with reporting obligations, SI 2020/25 includes an additional test for a connection with the United Kingdom; namely, registration with a professional body in the United Kingdom, which does not contain the British model rules and draft regulations. This may mean that certain persons who would otherwise have been intermediaries under IS 2020/25 are not required to make a declaration under the proposed Regulations. The Model Rules require taxpayers and intermediaries to disclose information about these types of agreements and structures to HMRC. These regulations will replace similar EU rules previously introduced. The UK and EU had agreed to maintain disclosure regimes after Brexit, with the OECD`s MDR model effectively being a “minimum standard”. The decision to align the UK`s implementation of DAC6 more clearly with this minimum standard was widely welcomed by UK companies, as existing UK systems (e.g.
DOTAS) fulfilling a similar role had raised doubts about the “added value” of other aspects of DAC6 rules in the UK. 5.3.4. A person is also not required to come forward if he or she has proof that the information has been reported to the tax authorities of a partner country. A partner country is defined in the model legislation as one that has essentially similar reporting requirements in place and has put in place the necessary exchange of information mechanisms to ensure that the information is made available to the competent tax authorities in the jurisdiction(s) where the reporting taxpayer(s) use the arrangement or structure; is resident. The United Kingdom intends to publish a list of partner countries in an annex to the rules to give effect to this provision. 4.3.3. Unlike SI 2020/25, which transposed DAC 6 and is replaced by this Regulation, the MDR does not contain an explicit requirement that an agreement must be `cross-border` in order to be declarable. However, the definition of `cross-border agreement` applicable to SI 2020/25 included any agreement that `has a potential impact on the automatic exchange of information` and any agreement to circumvent the CRS under those rules is likely to have such an effect. Nevertheless, there may be tangible differences. For example, it is proposed that systems and agreements based on the 29. October 2014 (when the country-specific recommendation was first published), although this is only suggested by the “promoters” of the scheme or agreement concerned.
Although a scheme or arrangement should not conflict with anti-money laundering rules (due to beneficial ownership determination), the consultation paper published by HMRC states that it may still be necessary to disclose it to HMRC if beneficial ownership is (still) hidden from the tax authorities. 4.1.13. The definition of “intermediary” applies to “any person”. The person is not defined in either the Model Rules or the draft Regulation and therefore takes on its ordinary meaning, which includes natural persons as well as any legal person, including a company or limited liability company. Under UK law, partnerships do not have their own legal personality (with the exception of partnerships in Scotland) and therefore do not fall within the definition of intermediary. However, the partners of the partnership would be intermediaries if they carried out the relevant activities to bring them within the scope of the definition.