Back in 2020 and 2021, nearly 12 million files were released detailing offshore structures created on behalf of wealthy individuals in order to hold significant wealth and assets. The files came to be known as the Pandora Papers.
While in many cases the structures were entered into for legitimate reasons, such as security, the levels of wealth and lack of transparency shone a light into the secret offshore affairs of hundreds of world leaders, celebrities and billionaires.
While journalists pored over the files, so did HMRC, looking for individuals who had not paid the right amount of UK tax on assets concealed within these structures. HMRC is now writing to UK residents who were named in the Pandora Papers. The letters warn recipients to report all the overseas income and gains on which they owe UK tax, by making use of one of two disclosure facilities.
The two facilities - the Contractual Disclosure Facility and the Worldwide Disclosure Facility - work in different ways and it is important to use the correct one for your circumstances. If in any doubt, seek professional tax advice. HMRC warns that those who do not report any assets on which UK tax is later found to be due will face penalties of up to 200% of the tax due or prosecution.