Mutual Assistance in the Recovery of Debt (MARD) Explained

Mutual Assistance in the Recovery of Debt (MARD) Explained

In an increasingly globalised world, governments and tax authorities face significant challenges in recovering debts, especially when individuals or businesses owe money across borders. Mutual Assistance in the Recovery of Debt (MARD) is an essential mechanism designed to address these challenges.

What is MARD?

MARD is an international framework that enables cooperation between countries in recovering tax debts, customs duties, and other financial obligations. This framework allows one country’s tax authority to seek assistance from another in collecting debts owed by individuals or entities residing in the latter’s jurisdiction.

MARD Law and Regulations

MARD functions under a range of international treaties and legislative frameworks that govern its implementation. The UK and the EU have specific laws in place to support MARD operations.

UK MARD Legislation:

• Finance Act 2011 (Section 87 & Schedule 25)
• The MARD Regulations 2011 (SI 2011 No. 2931)
• The MARD (Amendment) (EU Exit) Regulations 2020 (SI 2020 No. 996)

EU MARD Legislation:

• EU Council Directive 2010/24/EU on mutual assistance for the recovery of claims relating to taxes, duties, and other measures
• EU Commission Regulation 1189/2011 of 19 November 2011
• EU Commission Decision C(2011) 8193 of 18 November 2011

Although the UK is no longer a member of the EU, certain EU legislation continues to apply in specific circumstances, ensuring that cross-border debt recovery remains effective.

Debts Covered by MARD

MARD is typically invoked in situations where a debtor has moved assets or established residence in another country. In such circumstances, it becomes increasingly difficult for the original tax authority to enforce collection on unpaid taxes. That’s where the MARD legislation comes into play. The MARD provisions cover a range of debts that tax authorities can recover through international assistance. With these regulations, HMRC can invoke MARD to collect various outstanding debts, including:

• Income Tax and Corporate Tax
• Value-Added Tax (VAT) and Sales Tax
• Customs Duties
• Excise Duties
• Social Security Contributions
• Fines and Penalties imposed for tax-related offenses or non-compliance.

MARDs Role in Ensuring Tax Compliance

MARD plays a crucial role in preventing tax evasion by enabling government authorities to recover unpaid taxes and duties that would otherwise be difficult to enforce across borders. However, the MARD provisions face several challenges. Differences in national tax laws and enforcement procedures can create legal and procedural obstacles, making cross-border debt recovery complex and sometimes inconsistent.

Privacy and data protection concerns also arise, as the exchange of financial and tax-related information between countries must comply with strict regulations to ensure confidentiality and security. Additionally, bureaucratic delays can slow down the process, as administrative requirements and verification steps may extend the time it takes for tax authorities to recover debts.

Handling a MARD Demand

Navigating the complexities of MARD can be challenging for businesses and individuals facing cross-border tax issues. Our tax investigations team has experience in assisting clients with MARD-related matters, including debt recovery negotiations, compliance, and liaising with international tax authorities. Whether you need help understanding your obligations, responding to a MARD request, or seeking expert guidance on tax disputes, we are here to support you. Contact us today to learn how we can assist you in resolving tax debts efficiently and effectively.