Pandora Papers: Everything you need to know

What are the Pandora Papers?

The International Consortium of Investigative Journalists (ICIJ) conducted what it described on its website as a ‘massive cross-border investigation’ that resulted in what became known as the Panama Papers. It was essentially a giant leak of more than 11.5 million financial and legal records.

This was followed by the more recent Pandora Papers which, the ICIJ website suggests, was carried out by more than 600 journalists from 150 news outlets and initially unearthed the offshore dealings of 35 current and former public officials and politicians around the world. The papers, it claims, has more widely unmasked the hidden owners of offshore companies, secret bank accounts, private jets, yachts, mansions and artworks.

HMRC, like anyone else, have access to this information and could potentially refer to it or use it as a basis for questioning in a tax investigation.

What does this mean?

HMRC are certainly taking the information revealed in the Pandora Papers seriously and on 12th June 2023 published a press release giving UK resident taxpayers a “chance to come clean”.  They have started writing to taxpayers named in the files of 14 offshore financial service providers urging them to correct their tax affairs or face penalties of up to 200% of any tax or criminal prosecution.

There are many ways to approach HMRC and specialist advice is always required to ensure that the correct approach is made. That would mean looking at the taxpayer behaviour – why wasn’t the offshore income and/or capital gains disclosed, the assessment time limits – how far can HMRC legally go back to assess historical income/gains?

Choosing the wrong disclosure facility could have catastrophic consequences for you. For example, a disclosure where the most appropriate facility is the Contractual Disclosure Facility within Code of Practice 9 (suspected serious tax fraud) may result in your prosecution if you choose a different, incorrect, approach to HMRC.

HMRC’s press release makes clear that “it is important that individuals use the correct disclosure facility. If individuals aren’t clear about which facility to use, HMRC would recommend getting professional tax advice”. (HMRC Press Release 12th June 2023)

What do you need to do?

Anyone in the position where the Pandora Papers, or any other tax irregularity, is relevant should not only seek professional tax advice but should seek it from a professional who is a tax investigations specialist. It cannot be stressed enough that only specialist advice should be sought in this area because the risks of getting this wrong could mean you face a term of imprisonment.

What next?

At Gravita we have a specialist tax investigations and dispute resolution service. Our service is led by Dion Laycock who has over 25 years of tax practice and is a specialist in this field. If you have any situation with HMRC that you require advice on, do not hesitate to get in contact.