HMRC is on high alert to investigate the tax affairs of those who have used offshore tax arrangements, following the Pandora Papers leak to a number of investigative journalism organisations, according to law firm RPC.
The firm says ‘HMRC has been handed a treasure trove of information and will examine closely the 12 million leaked documents’. Adam Craggs, partner and head of tax and financial crime at RPC said: ‘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.’
Following other revelations in recent years – particularly the 2016 Panama Papers leak when HMRC set up a dedicated taskforce to investigate and bring criminal charges – HMRC is now far better equipped to carry out investigations across jurisdictions, by making use of shared intelligence and working with other tax authorities.
Michelle Sloane, partner at RPC, points out that ‘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’. But Sloane also notes that such arrangements are often used for legitimate purposes' such as moving assets out of unstable political regimes.
However, Professor Rita de la Feria, chair in tax law at the University of Leeds, commented on Twitter that: ‘A lot of what is reported is from a tax perspective – emphasis on this – legal.’ There were two key issues at stake, she thought. First, that the tax system ‘creates and enhances inequalities’, as highlighted by these leaks. And second, ‘the leaks implicitly raise the question of the origin of the income. In some cases this is clear, but in many it is not.’
Dan Neidle, tax partner at Clifford Chance, tweeted: ‘As with many “tax leaks”, the juicy gossip detracts from the point that should be made. Most valuable commercial UK real estate is sold by selling shares in a company holding the real estate, to avoid stamp duty. If we want to stop that, change the law.’
In a client briefing, Rachel de Souza, tax partner at RSM UK, said: ‘The real issue thrown up by the Pandora Papers is that it is possible to use a company to buy UK assets and for the name of the ultimate owner to remain private. This privacy also creates the potential to use a company as a way of laundering dirty money.’
She noted though that the UK has made ‘huge strides’ to counter both of these issues – with the implementation of anti-money laundering legislation and the introduction of the new legal requirement to identify any persons with significant control over UK companies.
‘The Pandora Papers do raise some important issues but not about tax evasion,' she concluded.
HMRC is on high alert to investigate the tax affairs of those who have used offshore tax arrangements, following the Pandora Papers leak to a number of investigative journalism organisations, according to law firm RPC.
The firm says ‘HMRC has been handed a treasure trove of information and will examine closely the 12 million leaked documents’. Adam Craggs, partner and head of tax and financial crime at RPC said: ‘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.’
Following other revelations in recent years – particularly the 2016 Panama Papers leak when HMRC set up a dedicated taskforce to investigate and bring criminal charges – HMRC is now far better equipped to carry out investigations across jurisdictions, by making use of shared intelligence and working with other tax authorities.
Michelle Sloane, partner at RPC, points out that ‘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’. But Sloane also notes that such arrangements are often used for legitimate purposes' such as moving assets out of unstable political regimes.
However, Professor Rita de la Feria, chair in tax law at the University of Leeds, commented on Twitter that: ‘A lot of what is reported is from a tax perspective – emphasis on this – legal.’ There were two key issues at stake, she thought. First, that the tax system ‘creates and enhances inequalities’, as highlighted by these leaks. And second, ‘the leaks implicitly raise the question of the origin of the income. In some cases this is clear, but in many it is not.’
Dan Neidle, tax partner at Clifford Chance, tweeted: ‘As with many “tax leaks”, the juicy gossip detracts from the point that should be made. Most valuable commercial UK real estate is sold by selling shares in a company holding the real estate, to avoid stamp duty. If we want to stop that, change the law.’
In a client briefing, Rachel de Souza, tax partner at RSM UK, said: ‘The real issue thrown up by the Pandora Papers is that it is possible to use a company to buy UK assets and for the name of the ultimate owner to remain private. This privacy also creates the potential to use a company as a way of laundering dirty money.’
She noted though that the UK has made ‘huge strides’ to counter both of these issues – with the implementation of anti-money laundering legislation and the introduction of the new legal requirement to identify any persons with significant control over UK companies.
‘The Pandora Papers do raise some important issues but not about tax evasion,' she concluded.
