The Pandora Papers
HMRC is targeting individuals named in the Pandora Papers.
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HMRC has been issuing letters to taxpayers named in the Pandora Papers and explained that penalties of up to 200% of any tax that is found to be due may be charged. We understand this may be a stressful time for those named in the Pandora Papers, but Crowe’s specialist Tax Resolutions advisers are here to help.
HMRC has been contacting UK resident taxpayers named in the documents encouraging them to review their tax affairs and ensure they have correctly disclosed their tax liabilities.
Hundreds of people were contacted during the initial round of the campaign in June 2023, with follow-up action undertaken in December 2023 and most recently in April 2024. Only 15% of recipients of the letters are thought to have responded, and so HMRC will continue to push the rest for information.
Anyone who has received a letter from HMRC is advised to seek specialist advice at the earliest opportunity.
Given the use of offshore centres and structures which HMRC believes are commonly associated with tax evasion, along with allegations of hidden assets, tax avoidance and corruption against individuals named in the documents, HMRC is naturally extremely interested and has established a dedicated team for this campaign, and have escalated investigations into individual taxpayers.
HMRC’s letter indicates that penalties of up to 200% of any underpaid tax liabilities may be charged, under the ‘Failure to Correct’ penalty regime for offshore tax matters, and warns taxpayers that they may face prosecution or criminal action if their tax affairs indicate dishonest or fraudulent behaviour.
In such cases a disclosure under the Contractual Disclosure Facility (CDF), also known as Code of Practice 9 (COP9) should be made, as this is the only disclosure route which secures immunity from prosecution in exchange for a full disclosure of all deliberate and non-deliberate tax irregularities. Where irregularities do not involve fraudulent behaviour, alternative routes such as the Worldwide Disclosure Facility (WDF) for disclosures of offshore tax matters may be more appropriate.
The documents involve 14 offshore financial services providers who specialise in incorporating Trusts, companies and other structures to hold individuals’ income and assets. These providers are often based in low tax jurisdictions seen as having lower levels of transparency and governance. The documents have already implicated high-profile individuals including influential politicians and businesspersons, and it is the largest release of such information following the Panama and Paradise Papers in 2016 and 2017.
Crowe’s specialist Tax Resolutions team have vast experience in dealing with tax disputes, disclosures and investigations and can advise on the best route forward. We can work alongside your existing advisor or accountant. Even if you have not received a letter but are concerned about your tax affairs, specialist advice is recommended and coming forward voluntarily before HMRC has a chance to write to you will put you in a more favourable position.
Penalties for tax irregularities may be mitigated by early disclosure and full co-operation during the disclosure process. Even if there are no tax issues to disclose, early dialogue with HMRC will help to prevent further queries.
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We are professional advisors who specialise in helping our clients with HMRC Disputes, Investigations and Disclosures.
If you would prefer to speak to us, please call our free confidential helpline +44 (0)800 656 9900.
