The Pandora Papers consists of 11.9 million leaked documents from 14 offshore financial service companies. This information was gradually released by the International Consortium of Investigative Journalists from October 2021 onwards.
HMRC has been reviewing this data and is now writing to around 600 people named in those papers. This is only the first tranche of the total number of taxpayers who HMRC will contact as a result of this information coming to light.
The HMRC letter asks the taxpayer to review their disclosure of offshore income or gains on their tax returns, and warns that if there is an under-declaration the penalties could amount to 200% of the unpaid tax. The individual could also face a criminal prosecution if they make a dishonest disclosure.
If you receive this HMRC letter there are two routes you can use to make a disclosure:

– Where there has been deliberate mis-statement of taxable income or gains use the Contractual Disclosure Facility (CDF) and Code of Practice 9 (COP 9).
– Where there has been no deliberate offshore non-compliance use the Worldwide Disclosure Facility (WDF).

Using the COP9 route will allow HMRC to recover tax, interest, and associated penalties as far back as 20 years. However, you would have protection from criminal prosecution for tax offences so long as you make a complete, open, and honest disclosure of all the deliberate understatements on your tax returns.
Making either type of disclosure is a complicated process. You should take advice from a suitably qualified tax investigation specialist before making your disclosure.