HMRC targeting UK residents named in the Pandora Papers

In October 2021, the International Consortium of Investigative Journalists published the Pandora Papers – 11.9 million leaked documents which included files from 14 offshore financial service providers specialising in companies, trusts, and foundations in either low or no tax jurisdictions.

In response to this, HMRC has now sent ‘nudge letters’ to some taxpayers named in the papers who they suspect may have additional tax liabilities. These letters were sent on or around 5 June 2023 and mark the first phase of HMRC’s response to the Pandora Papers, asking people to review their tax affairs and ensure they are up to date.

Kirsty Telford, Deputy Director for Offshore at HMRC’s Risk and Intelligence Service said: “Tax evasion is increasingly global but, unfortunately for tax criminals, so is HMRC’s reach, accessing data and intelligence through international collaboration.”

Now HMRC’s Connect system feeds in data on overseas bank accounts and investments obtained through an ever-expanding number of international agreements. So, if you have any overseas interests, it is now a good time to seek further advice about these.

Key points to note

• If HMRC knows that an agent represents the taxpayer and the appropriate authorisation is in place, the letters will be copied to the agent.
• On the letter, HMRC provides a telephone number for contacting a dedicated team for questions. Please seek advice before performing this action.
• Taxpayers are given 30 days to check their tax position and told they may be subject to penalties of up to 200% of any tax due.
• Taxpayers are not required to take any action if their tax affairs appear to be correct and current. Please seek advice before reaching this conclusion.

What you need to be aware of

• In the event of dishonest behaviour, HMRC may prosecute.
• In cases of deliberate dishonesty or fraud, the Contractual Disclosure Facility (CDF) should be used.
• If the taxpayer makes a complete, open, and honest disclosure of all deliberate behaviour and HMRC accepts him/her into COP9, the taxpayer will be protected from criminal prosecution for tax offences under the CDF/Code of Practice 9 (COP9) route.
• An alternative method for disclosing non-deliberate offshore noncompliance would be the Worldwide Disclosure Facility (WDF).

A copy of the letter can be found here.

How can we help?

If you have received or expect to receive a letter from HMRC in relation to the Pandora Papers, we recommend seeking professional advice. Should you wish to discuss these matters further or indeed require expert advice, please contact Private Clients and Dispute Resolution Partner, Anthony Rose.