Leak of Pandora Papers puts HMRC on high alert to investigate tax affairs

The Pandora Papers leak has put the HMRC on high alert to investigate tax affairs of those who have made use of offshore tax arrangements, says RPC, the international law firm.

The Panama Papers leak in 2016 led to the establishment of a taskforce, which resulted in arrests, criminal charges and civil penalties being levied. Following the publication of the Panama Papers, HMRC confirmed it was investigating 700 leads.

Adam Craggs, Partner and Head of Tax and Financial Crime at RPC says: “HMRC has been handed a treasure trove of information and will examine closely the 12 million leaked documents.”

“Given the large amounts of money at stake, the Revenue will be investing considerable resources in investigating the tax affairs of the persons concerned.”  

“Those who are aware that their data has been leaked and who wish to review their tax affairs before HMRC come knocking, should seek expert professional advice and consider making a voluntary disclosure. This could potentially make the difference between HMRC pursuing a civil or criminal investigation. It is also likely to significantly mitigate any penalties which HMRC might seek to impose.”

In 2018, the UK joined forces with the US, Canada, Australia and the Netherlands to establish the Joint Chiefs of Global Tax Enforcement (J-5) the aim of which is to crackdown on international tax evasion.

Michelle Sloane, Partner at RPC adds: “HMRC is now extremely well-equipped to carry out multi-jurisdictional investigations, through shared intelligence and co-operation with international tax authorities." 

“HMRC will no doubt look to make an example of a high-profile figure to deter anyone who they consider has abused the tax system through the use of offshore entities and structures.  Moving money or setting up companies in so-called tax havens may be considered unethical by some.  However, it is important to remember that there are also entirely legitimate reasons why a person may wish to hold assets or investments in different countries, such as protection from criminal attacks or in order to be outside of unstable political regimes.”

Sam Tate, Partner and Head of White Collar Crime & Compliance at RPC says: "We now see investigations brought by HMRC but certainly also the Serious Fraud Office and Financial Conduct Authority will be on top of this. The size, complexity - and particularly international nature of these investigations - must not be underestimated."  

Tate adds: "Data leaks are a hugely important feature of our digital world. Lawyers and in-house lawyers alike are rushing to understand the full implications of these latest papers".