David Francis, partner, and Joe Burns, associate director, in Grant Thornton’s tax dispute resolution team examine HMRC’s investigation activity related to the revelations in the Pandora Papers and how their approach will shape future compliance strategies
In June 2023, HMRC wrote to 660 UK taxpayers implicated by the Pandora Papers leak of 2021. However, rather than opening investigations into these individuals, HMRC invited recipients to consider making a voluntary disclosure.
Historically, HMRC has investigated suspected tax loss by opening enquiries and conducting investigations. HMRC operates a risk-based approach to conducting investigations. It will use its information powers to gather evidence that enable it to check each of the tax ‘risks’ it believes are present and HMRC will only cease investigating once it is satisfied that all of its ‘risks’ have been satisfactorily addressed.
While HMRC investigations are intrusive for taxpayers and can take considerable time to complete, when worked properly, they are a highly effective means of recovering unpaid tax, particularly in cases where the taxpayer’s tax affairs are complex.
