How The UK Tax Authority Is Responding To The Pandora Papers
The Pandora Papers were one of the biggest financial leaks in history, revealing how some of the wealthiest people in the world had been using offshore tax havens to store and move their money. The 11.9 million documents leaked to the International Consortium of Investigative Journalists from 14 offshore financial services firms shows the use of offshore trusts and shell companies by both the political classes and the super wealthy. The revelations included the names of dozens of world leaders and prompted tax authorities around the world to renew calls to curb offshore evasion following the 2016 Panama Papers, the first major data leak.
The UK tax authority, HM Revenue & Customs (HMRC), has responded by sending letters to hundreds of people named in the Panama Papers, warning them of penalties if they don’t verify that they have paid in full. HMRC has told people named in the 2021 Pandora Papers to verify they have disclosed all their liabilities tax in the UK from foreign income or gains. These people have 30 days to report any outstanding tax payments and warned that people who miss the deadline could face penalties, including a fine of up to 200% of any amount owed and actions. penalties.
The Pandora Papers and UK tax fraud
One of the reasons that HMRC is acting quickly after the Pandora Papers timeline is that official estimates have put the amount lost by the UK to tax fraud each year at around £10bn. That figure represents almost a third of the “tax gap,” defined as the difference between taxes due and paid. Comprised of 11.9 million documents leaked to the International Consortium of Investigative Journalists from 14 offshore financial services firms, the Pandora Papers focused on the use of offshore trusts and shell companies by the political classes and the super wealthy. However, this does not mean everyone in this position is evading tax.
Kirsty Telford, Deputy Director for Offshore at HMRC’s Risk and Intelligence Service, explained that “Tax evasion is increasingly global, as is HMRC’s reach, access to data and intelligence through international collaboration.” She added that “Our message to users of these financial services is to be honest and pay your taxes; the reputational and financial damage if you don’t do this can be significant and lasting.” HMRC began reviewing its internal people data as soon as the Pandora Papers were released, and while they were continuing to review data from the disclosures and may investigate some tax documents further, people didn’t need to take action if they believed their tax affairs were up to date.
For example, in July 2022, the UK Tax Authority announced plans to publish estimates of the amount of tax evaded by UK residents who hold money offshore. The move followed criticism for its failure to estimate what percentage of foreign financial accounts have been adequately disclosed.
Cracking down on non-disclosure of taxed income
In response to the Pandora Papers, HMRC has become more stringent about its regulations for disclosing taxed income. HMRC has set up a UK Hotline Service for Making Tax Digital for Income Tax to help taxpayers prepare for the end of the year. They are reminding people that the end of the year is approaching, and taxpayers are responsible for any underpayments of tax or errors on tax returns. HMRC is also recommending that taxpayers check for errors on their tax returns and submit them early to avoid fines.
HMRC has also partnered with software developers to provide online resources for people who want to check their tax return status. For example, HMRC has partnered with Council Self-Assessment to offer an app that lets taxpayers check their accountants’ status. This will help ensure that taxpayers use legitimate tax services rather than unregulated or fraudulent ones.
Finally, HMRC is using artificial intelligence (AI) and machine learning (ML) to analyze unstructured data for non-disclosure of taxed income. They are using algorithms to identify potentially fraudulent tax returns and are investigating any suspicious activity. The use of AI and ML means that HMRC can work more quickly and accurately to identify people who are evading tax.
Summary
In response to the Pandora Papers, HMRC has become more stringent about its regulations for disclosing taxed income. HMRC has set up a UK Hotline Service to help taxpayers prepare for the end of the year and is reminding people that they are responsible for any underpayments of tax or errors on tax returns. HMRC is also recommending that taxpayers check for errors on their tax returns and submit them early to avoid fines. Finally, HMRC is using technology, such as AI and ML, to identify and investigate potentially fraudulent tax returns. All of these measures are designed to make it harder for people to evade tax and to encourage people to pay their taxes honestly and in full.
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The UK tax authority has written to hundreds of people named in one of the biggest financial leaks, warning them of penalties if they don’t verify that they’ve paid in full.
In letters Sent on Monday, HM Revenue & Customs told people named in the 2021 Pandora Papers, which showed how some of the richest people in the world had used offshore tax havens to store and move money, to verify they had disclosed all their liabilities tax in the UK from foreign income or gains.
The agency told recipients of its letter they had 30 days to report any outstanding tax payments and warned that people who miss the deadline could face penalties, including a fine of up to 200% of any amount owed and actions. penalties.
HMRC’s warning follows official estimates which put the amount lost by the UK to tax fraud each year at around £10bn. That figure represents almost a third of the “tax gap,” defined as the difference between taxes due and paid.
Comprised of 11.9 million documents leaked to the International Consortium of Investigative Journalists from 14 offshore financial services firms, the Pandora Papers focused on the use of offshore trusts and shell companies by the political classes and the super wealthy.
The revelations included the names of dozens of world leaders and prompted tax authorities around the world to renew calls to curb offshore evasion following the 2016 Panama Papers, the first major data leak.
Kirsty Telford, Deputy Director for Offshore at HMRC’s Risk and Intelligence Service, said: “Tax evasion is increasingly global, as is HMRC’s reach, access to data and intelligence through international collaboration.
“Our message to users of these financial services is to be honest and pay your taxes; the reputational and financial damage if you don’t do this can be significant and lasting.
HMRC said it began reviewing its internal people data as soon as the Pandora Papers were released. He added that while he was continuing to review data from the disclosures and may investigate some tax documents further, people didn’t need to take action if they believed their tax affairs were up to date.
In July 2022, the UK Tax Authority announced plans to publish estimates of the amount of tax evaded by UK residents who hold money offshore. The move followed criticism for its failure to estimate what percentage of foreign financial accounts have been adequately disclosed.
https://www.ft.com/content/3975c463-ce2b-4330-96f3-ed3d23520b3f
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