UK residents implicated in the leaked Pandora Papers are being provided with an opportunity by HMRC to rectify their tax situations and make a disclosure of overseas income or gains which may be subject to UK tax.
HM Revenue and Customs (HMRC) is sending letters to individuals residing in the UK who have been mentioned in the records of 14 offshore financial service providers specialising in low-tax or tax-free jurisdictions for companies, trusts, and foundations.
HMRC nudge letters, disclosure of overseas income or gains
Commencing this month, HMRC’s nudge letters advise the recipients about the disclosure of overseas income or gains and how they might be subject to UK tax or face penalties of up to 200% of the outstanding tax amount and potential legal action.
Kirsty Telford, Deputy Director for Offshore at HMRC’s Risk and Intelligence Service recently emphasised the growing global nature of tax evasion. HMRC possesses an extensive reach through the use of data and intelligence obtained through international collaboration.
Telford’s message to users of such financial services is clear: thoroughly consider the consequences and seize this opportunity to be transparent and fulfil their tax obligations. Failure to do so can result in substantial and enduring reputational and financial harm. HMRC is granting a limited timeframe for individuals to rectify their tax records before taking further action.
Following the release of over 11 million records from 14 offshore service providers by the International Consortium of Investigative Journalists, known as the Pandora Papers, HMRC promptly initiated a review of the data. This collection of financial documents represents the largest ever disclosure of its kind, surpassing the Panama Papers released in 2016. The aim is to identify UK residents with undisclosed offshore assets.
Tim Humphries, RPGCC’s Tax Partner added “if you have been on the receiving end of a recent nudge letter from HMRC and you need to make a disclosure of overseas income or gains or, if indeed you have any offshore tax issue that you wish to discuss, please contact us before you take any action. Failure to seek professional advice at the outset can be costly and it is often difficult to rectify”.
A member of our tax team is happy to discuss any area of overseas tax with you.