Panama Papers – the next instalment or the lull before the storm

It only seems like days since the unprecedented announcement by the International Consortium of Investigative Journalists (ICIJ) that they had obtained in excess of 11 million documents covering the last 40 years relating to Panamanian law firm and corporate service provider Mossack Fonseca and their clients. These documents have commonly become known as the “Panama Papers”.

The documents include information about companies, trusts, foundations and funds incorporated in 21 tax havens, from Hong Kong to Nevada in the United States and the people behind them.

Why do you need to know?

Since the announcement by the ICIJ, tax authorities across the world (including HMRC) have put in requests to see the documentation the ICIJ have obtained. It is not clear whether these requests have been complied with, however it is extremely important to note that the ICIJ will be releasing on their website on 9 May 2016, a searchable database with information on more than 200,000 offshore entities which form part of the Panama Papers. It is understood that when the database is released, it will be possible to view data relating to Mossack Fonseca’s own internal records of the true owners of the offshore entities.

The ICIJ have stated that they “won’t release personal data en masse; the database will not include records of bank accounts and financial transactions, emails and other correspondence, passports and telephone numbers. The selected and limited information is being published in the public interest.”

Is it just about Panama?

Whilst the documentation was obtained from Panamanian firm Mossack Fonseca, it is possible that offshore structures may involve other jurisdictions, for instance the Cayman Islands, British Virgin Islands (BVI), Bermuda and Switzerland.

Should you be concerned?

If you have nothing to do with the offshore arena, then there is absolutely nothing to fear.

If you have been involved in various tax planning structures using some of the jurisdictions mentioned above and you have been assured the planning is robust, the only possible matter to be concerned about is the reputational risk of data being released into the public domain. You may wish to obtain the services of a PR company if this is an issue.

However, a substantial number of UK individuals who may be caught up in the Panama Papers may have undertaken historic tax planning based on rules and concepts involving non-domiciliaries, which may in today’s climate be ineffective for UK tax purposes. If this transpires to be the case, you should seek tax advice as a matter of urgency.

Why is it important to seek tax advice now?

It is clear that at some point HMRC will have access to all the Panama Papers relating to UK individuals. Additionally, with the ICIJ releasing some of the documentation in a database on 9 May, individuals may wish to seek a second opinion surrounding the robustness of any tax structure. In the event there is any unpaid tax connected with the offshore structure it is possible to secure a number of benefits in making a voluntary disclosure, which could include immunity from a criminal investigation.

Additionally, whilst the Panama Papers have to date only come from Mossack Fonseca, it may have been the case that Mossack Fonseca were providing services to other offshore service providers and so the documentation obtained by the ICIJ might be of a wider scope than just Mossack Fonseca’s own direct clients.

Who to contact

At BKL our tax team, including former tax inspectors, have a significant amount of experience in managing tax disclosures involving overseas assets and mitigating the amount that should be paid.

For more information, please get in touch with your usual contact or use our enquiry form.

Geraint Jones

Partner, Private Client Tax

T +44 (0)20 8922 9354
E geraint.jones@bkl.co.uk

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