In many more cases we can confidently expect that HMRC will employ a methodology that it has developed and used wholesale in the time since the original Panama Papers publications in 2016 – nudge letters. HMRC will process the whole mass of data to identify UK taxpayers with offshore connections and then mass mail them hinting that their UK tax returns might not be right based on unspecified information received by HMRC that they have offshore assets, income or gains. Taxpayers are then invited to voluntarily self-disclose any tax irregularities, should they exist, rather than live with the implicit threat of investigation hanging over them.
Nudge letters are remarkably effective at flushing out non-compliance and show that, at least where HMRC is concerned, small unspecified nuggets of information applied privately can go a long way. For their part, journalists are unlikely to be fed back more than a few vague and less-than-headline-grabbing statistics.
Andrew Park is tax investigations partner at Andersen
