HMRC gives offshore customers chance to come clean

UK residents who were named in the leaked Pandora Papers are being given the chance to correct their tax affairs.

HM Revenue and Customs (HMRC) is writing to UK residents named in the files of 14 offshore financial service providers. These providers specialise in companies, trusts, and foundations in low, or no tax, jurisdictions.

The letters, which started going out this month, warn recipients to report all their overseas income or gains that they owe UK tax on, or face penalties of up to 200% of any tax due or prosecution.

Kirsty Telford, Deputy Director for Offshore at HMRC’s Risk and Intelligence Service said: “Tax evasion is increasingly global – but, unfortunately for tax criminals, so is HMRC’s reach, accessing data and intelligence through international collaboration.

“Our message to users of these financial services is think hard and take this opportunity to be honest and pay the tax you owe, because the reputational and financial damage if you don’t can be significant and long-lasting. We are giving people a narrow window of time to do the right thing and correct their tax records, before we take action.”

During 2021 and 2022, the International Consortium of Investigative Journalists released more than 11 million records from 14 offshore service providers, this is known as the Pandora Papers.

As soon as these papers were released, HMRC began reviewing the data, which is the largest ever release of financial documents, surpassing the 2016 release of the Panama Papers, to find UK residents with untaxed offshore assets.

Contractual Disclosure Facility (CDF): Admit tax fraud to HMRC using the Contractual Disclosure Facility - GOV.UK (www.gov.uk)

Worldwide Disclosure Facility (WDF): https://www.gov.uk/guidance/worldwide-disclosure-facility-make-a-disclosure and https://www.gov.uk/tax-foreign-income.

Notes to Editors

• During 2021 and 2022, the International Consortium of Investigative Journalists (ICIJ) released more than 11 million records from 14 offshore service providers, referred to as the ‘Pandora Papers’.
• Recipients of these letters can make disclosures under the disclosure facilities made available by HMRC:
1. The Contractual Disclosure Facility (CDF) is a contractual arrangement whereby HMRC undertakes not to criminally investigate, in return for the customer’s open full, open, and honest disclosure of all the tax fraud committed. It is part of COP9. Under the investigation of fraud procedure, the recipient of COP9 is given the opportunity to make a complete and accurate disclosure of all their deliberate and non-deliberate conduct that has led to irregularities in their tax affairs.
2. The Worldwide Disclosure Facility (WDF) is for use by anyone who wants to disclose a UK tax liability that relates wholly or partly to an offshore issue. The WDF Facility does not provide any protection from prosecution and so where there is deliberate and/or fraudulent conduct such as evasion the CDF is the more appropriate facility.