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What are the mandatory disclosure rules?

The UK mandatory disclosure rules (MDR) are set out in regulations which bring into force the OECD’s Model Mandatory Disclosure Rules covering common reporting standard (CRS) avoidance arrangements and opaque offshore structures. In essence, the OECD rules require intermediaries and sometimes taxpayers to disclose details of avoidance arrangements which use opaque offshore structures, or which circumvent the reporting of financial information under the CRS to the tax authorities.

The UK MDR expands the information available to HMRC, so that offshore non-compliance can be identified and challenged more easily. It is hoped that the regulations also provide a deterrent to those who might otherwise engage in aggressive tax avoidance arrangements, for example, hiding money offshore or using artificial structures to hide assets. Those caught by the regulations are required to submit an MDR return to HMRC which must contain specified information. Penalties will be levied for non-compliance.

The regulations came into force on 28 March 2023 and repeal the International Tax Enforcement (Disclosable Arrangements) Regulations which implemented the EU equivalent