Pandora Papers nudge letters
If you’ve received an HMRC Pandora Papers nudge letter, responding correctly is critically important. Learn about your options and how we can help you to resolve the situation.
In 2021 and 2022, the International Consortium of Investigative Journalists (ICIJ) leaked more than 11 million documents from 14 different offshore financial service providers. These documents became known as the Pandora Papers. The ICIJ believes that the Pandora Papers will enable tax authorities across the world to recover billions of unpaid taxes.
Rather than opening an investigation into those it suspects of wrongdoing, HMRC has notified taxpayers that they have 30 days to reconsider the accuracy of their tax affairs and make a disclosure where necessary.
How can we help?
We are experts in resolving offshore tax enquiries swiftly and without our clients paying any unnecessary tax, penalties or interest. If you choose to work with Grant Thornton, we will:
- review your tax affairs holistically and identify any issues that require disclosure
- where necessary, register you for an appropriate disclosure facility
- prepare a disclosure on your behalf and act as a conduit between you and HMRC
- focus on resolving any dispute as swiftly and cost-effectively as possible.
Your FAQs answered:
Not every recipient of a Pandora Papers nudge letter will have irregularities in their tax affairs that need to be corrected. However, where irregularities are present, making a disclosure is beneficial. By making a disclosure, you have greater control over the process. Additionally, by presenting the relevant facts at the outset, settlements are likely to be achieved sooner and HMRC will give you additional credit for taking proactive steps to correct the position, if and when it comes to decide penalties.
Where your tax returns are accurate, there is nothing for you to disclose. However, if HMRC has sent you a nudge letter, it is clear you will have been identified by the Pandora Papers. If you do nothing, it is likely that HMRC will open an investigation and pursue the matter until it is satisfied the correct tax has been paid. To avoid an HMRC investigation, it may be wise to write to HMRC, explain the nature of your offshore interests and why no UK tax arises on them. Every case will be different, and our experts can help you to make the right decision for your circumstances.
We strongly recommend that anyone receiving a Pandora Papers nudge letter speaks to a tax disputes specialist as soon as possible. Tax associated with offshore interests can be complex and the consequences of responding inappropriately can be severe. We will undertake a full review of your tax affairs and advise you on how best to respond.
As part of our review, we will work to understand the nature of your offshore interests in the context of your existing tax declarations. Where your tax affairs are not up to date, we will explain where the tax liability arises and your potential exposure. We will also look to understand how and why the irregularity occurred.
HMRC offers several different disclosure facilities that might be appropriate for you. During the course of our review work, we will ask questions to find out the most appropriate disclosure facility for you. Where necessary, we can advise you to use a disclosure facility that offers immunity from criminal prosecution.
Tax fraud is a criminal offence and consequently, if tax fraud has occurred, criminal prosecution is a possibility. However, HMRC offers a voluntary disclosure facility specifically for people that have committed tax fraud. Provided you comply with your obligations once you have entered that facility, you will be immune from prosecution. We would urge anyone with concerns about criminal prosecution to speak to our experts immediately.
Where irregularities exist, HMRC is obliged to consider charging financial penalties and the penalty it charges will be determined by many factors. HMRC’s penalty regime is notoriously complex. For example, an error in one tax year could attract a 200% penalty, but the exact same error in a different tax year could attract a 10% penalty.
As highly skilled tax disputes professionals, we pride ourselves on our ability to minimise our clients’ exposure to penalties. We understand the different penalty regimes intricately and the prospect of penalties being charged is considered at every stage of our work.