The UK government has taken action following the release of the Pandora Papers, a collection of leaked financial documents that exposed offshore accounts and assets. HM Revenue and Customs (HMRC) is contacting UK residents named in the files to offer them an opportunity to correct their tax affairs.
The Pandora Papers
The Pandora Papers consist of over 11 million records from 14 offshore service providers, revealing the extent of untaxed offshore assets held by individuals worldwide. In the UK, HMRC is determined to address this issue and ensure that individuals pay the taxes they owe.
This month, HMRC began writing letters to UK residents mentioned in the Pandora Papers. These individuals are being warned to report all their overseas income or gains that are subject to UK tax or face penalties of up to 200% of the tax owed, along with potential prosecution.
Kirsty Telford, Deputy Director for Offshore at HMRC’s Risk and Intelligence Service, emphasized the global nature of tax evasion and highlighted that HMRC has the ability to access international data and intelligence through collaboration. Telford emphasized the importance for those named in the Pandora Papers to take this opportunity to correct their tax records. Failing to do so could result in significant and long-lasting reputational and financial damage.
The release of the Pandora Papers follows the previous leak of the Panama Papers in 2016, and it surpasses it in terms of the volume of financial documents. HMRC promptly reviewed the Pandora Papers to identify UK residents with undisclosed offshore assets.
To address the situation, HMRC is offering disclosure facilities for recipients of the letters. These facilities are designed to help individuals come forward and correct their tax records. It is crucial for those contacted by HMRC to use the correct disclosure facility, and if they are unsure which one to utilize, seeking professional tax advice is recommended.
Summary
The release of the Pandora Papers has prompted HMRC to take action and offer UK residents named in the leaks an opportunity to correct their tax affairs. HMRC’s letters send a clear message: individuals must report their overseas income or gains that are subject to UK tax to avoid penalties and potential prosecution. The international nature of modern tax evasion means that HMRC has access to global data and intelligence, enabling them to take action against tax avoidance. By coming forward and rectifying their tax records, individuals can avoid damaging consequences. It is essential for those contacted to choose the appropriate disclosure facility or seek professional advice to navigate this process effectively.