News has broken of a massive leak of data from the law offices of Mossack Fonseca, a Panamanian based law firm whose services include the incorporation of companies in offshore jurisdictions such as the British Virgin Islands. Mossack Fonseca has branches located in many offshore jurisdictions around the globe.
In response to the leak of data, HMRC has urgently put together a team to sift through the relevant aspects of the data in so far as they may relate to taxpayers with links to the UK. The volume of data is unprecedented and unlike the previous leaks arising in Liechtenstein and Switzerland, this data will be current and detailed.
HMRC will gratefully receive this data but a word of caution to anyone who still holds unexplainable sources of wealth overseas and perhaps hasn’t been caught by this specific leak…. In 2017 HMRC will, by virtue of Common Reporting Standards (CRS), be provided with data of a similar nature from most offshore jurisdictions. Those whose names are associated with this leak and use this offshore corporate service provider need to consider taking urgent and specialist advice because HMRC will proactively target these people.
It should be noted however, that a large number of individuals (particularly those who are internationally mobile) utilise structures in offshore jurisdictions legitimately e.g. for asset protection or succession planning purposes – there is nothing inherently unlawful about doing this. The UK’s personal tax regime, particularly as it relates to resident but non-domiciled individuals, allows for the use of non-UK structures in certain scenarios. Offshore structures utilised by such individuals may need to be reported and the appropriate taxes should be paid, though professional advice should be sought as this is a complex area.
HMRC Director-General of Enforcement and Compliance has stated:
“HMRC is committed to exposing and acting on financial wrongdoing and we relentlessly pursue tax evaders to ensure that they pay every penny of taxes and fines they owe. HMRC can confirm that we have already received a great deal of information on offshore companies, including in Panama, from a wide range of sources, which is currently the subject of intensive investigation.”
If you have any questions, please do not hesitate to contact any member of the Tax team at Edwin Coe.
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