The 15 sub-categories of hallmarks were grouped into five broad categories:
- Category A – Generic hallmarks linked with the main benefit test
- Category B – Specific hallmarks linked with the main benefit test
- Category C – Specific hallmarks related to cross-border transactions
- Category D – Automatic exchange of information and beneficial ownership
- Category E – Transfer pricing
As part of the UK’s DAC6 amendment provisions, Categories A to C and E have been repealed, with Category D remaining in place. This leaves reporting obligations in situations that either seek to undermine or circumvent reporting obligations under automatic exchange of information (Hallmark D1), or arrangements that seek to obscure beneficial ownership (Hallmark D2).
The EU’s DAC6 regime goes significantly beyond the OECD’s mandatory disclosure regime. The repeal brings the UK into line with the OECD’s requirements and meets our obligations under the UK / EU Trade and Cooperation Agreement (TCA).
While the above is a shift away from the EU’s Directive and only requires very limited reporting for a short period, HMRC plans to consult on the implementation of the OECD’s mandatory disclosure regime transitioning from EU to international rules and replacing DAC6.