HMRC launches nudge letter campaign following leaked “Pandora Papers”

Published by George Guilherme-Fryer on 14 June 2023

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Pandora’s box has been ‘nudged’ open

HMRC has launched a nudge letter campaign following the leak of the so called ‘Pandora Papers’ public in October 2021. The leak which consisted of a significant number of financial documents are named after Pandora, a figure from Greek mythology who opened a box that unleashed all the evils into the world and couldn’t return them to the box. Similarly, the publication of the Pandora Papers has exposed a vast trove of information related to offshore financial activities and hidden wealth held by individuals around the globe which cannot be hidden again.

The leak consisted of an estimated 11.9 million documents, revealing detailed information about more than 330,000 offshore companies, trusts, and foundations. These documents provided insights into the financial affairs of politicians, billionaires, celebrities, and other influential people from various countries as well as numerous other private individuals.
The Pandora Papers shed light on complex financial structures and offshore accounts used for many legitimate purposes as well as tax evasion, money laundering, and hiding the ownership of assets.

What are HMRC doing now following the leaked Pandora Papers?

It has taken almost two years and still HMRC have still not opened any enquiries. However, they have launched a new ‘nudge’ letter campaign encouraging taxpayers who have been named in the leak to come forward and settle any outstanding tax liabilities which may be related to the transactions detailed within.

The nudge letter currently being sent out warns that HMRC may charge penalties of up to 200% of the tax due, or that they could even consider criminal prosecution for dishonesty.

What should I do if I receive one of these nudge letters?

The first step is to not ignore the letter. HMRC advises individuals to seek professional tax advice. Kreston Reeves’ tax disputes team have years of experience supporting clients with offshore tax planning and representing individuals in dispute with HMRC.

There are two main facilities for settling with HMRC after being in receipt of one of these ‘nudge’ letters and Kreston Reeves can advise on the most suitable disclosure facility for an individual’s circumstances.

These facilities provided by HMRC are the Contractual Disclosure Facility (CDF) or the Worldwide Disclosure Facility (WDF). The CDF allows individuals to make a full and honest disclosure of tax fraud committed, offering the benefit of not being subject to criminal investigation. On the other hand, the WDF is applicable for disclosing UK tax liabilities related to offshore matters but does not provide protection from prosecution in cases involving deliberate or fraudulent conduct.

It is likely to take years for HMRC to fully investigate all of the cases involved with this leak, but it is sensible to take professional advice early to resolve the matter as quickly as possible.

If you have received a nudge letter and want advice, or have concerns that you may have liabilities and want to take proactive steps, contact us today.

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