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What are the origins of the UK MDR?

Taxpayers, promoters and advisers are required to disclose to HMRC details of certain offshore avoidance arrangements under the mandatory disclosure rules (MDR). This might include simple transactions such as the transfer of funds between bank accounts in different countries, or settling funds in an offshore trust. The International Tax Enforcement (Disclosable Arrangements) Regulations¹implement the MDR in the UK with effect from 28 March 2023. They replace the DAC 6² regime (see A6.1204A) which was introduced when the UK was a member of the EU. The UK MDR derives from the OECD's Model Mandatory Disclosure Rules for Common Reporting Standard Avoidance Arrangements and Opaque Offshore Structures and Opaque Offshore Structures, published in 2018.

The Government had previously consulted on the proposals. One of the key areas of concern was the length of the look back period and the difficulties a long look back period could cause with the amount of information gathering needed to comply with reporting requirements. However, the retrospective effect of the MDR has been limited