The Pandora Papers were the biggest release of offshore data to date, involving the leak of millions of documents in October 2021 by a number of offshore financial service companies.
Letters have been issued to some individuals named in the Pandora Papers
Having taken time to review the leaked information, HMRC have now begun the first phase of their response by issuing letters to some of the individuals named in the leak, requesting that they check their tax affairs and bring them up to date. A dedicated team has been set up within HMRC to deal with these enquiries, and they have also set up a dedicated phone line for individuals to call with any queries.
HMRC are only giving the recipients 30 days to respond to these letters, threatening penalties of up to 200% on any tax due and prosecution if they find taxpayers have been dishonest, with HMRC advising that further investigations into an individual’s tax records may occur. The letter also outlines that if a taxpayer believes their affairs are up to date, they don’t need to do anything, although careful thought should be given before deciding not to respond. We have included an example of HMRC’s letter here for reference.
What is the best course of action?
Receipt of this letter from HMRC should not automatically cause panic, as there are numerous legitimate reasons why a taxpayer would choose to use an offshore structure, and a claim for the Remittance Basis in any year where foreign income arose to that structure may enable a UK resident to omit that income or gains from their UK tax returns. If you or any of your clients do receive a letter, we recommend that you contact your tax adviser in the first instance, who can provide the necessary expertise to assist with a tailored response. It is also advisable to consider whether your tax adviser is better placed to call HMRC on your behalf, rather than making a call to the phone number provided yourself.