Last updated: 16 October 2026
Why is HMRC writing to people named in the Pandora Papers?
The Pandora Papers were 11.9 million documents leaked from offshore service providers and published from October 2021. HMRC reviewed the data and wrote to hundreds of UK taxpayers named in it, asking them to check whether their offshore income and gains had been taxed correctly. HMRC also gets vast amounts of data automatically through the Common Reporting Standard, under which more than 100 countries share details of accounts held by UK residents.
What the letter asks
These “nudge” letters usually ask you to review your tax affairs and either confirm that everything is in order or make a disclosure. Some ask you to sign a certificate of tax position. Ignoring the letter is risky: HMRC may open an enquiry, and penalties are higher where you were warned and did nothing.
How to respond
- Gather details of every overseas account, investment, property and trust for at least the last 12 years.
2. Work out whether you were UK resident in each year and how the income was taxed abroad.
3. If you owe tax, use the Worldwide Disclosure Facility (WDF) to disclose.
4. Pay the tax, interest at 7.75% a year and any penalty.
5. If you owe nothing, reply explaining why, with evidence.
Penalties for offshore errors
| Behaviour | Maximum penalty (depends on country category) |
| Careless | 30% to 60% of the tax |
| Deliberate | 100% to 200% of the tax, plus a possible asset-based penalty |
| Failure to correct (pre-2017 offshore errors not corrected by 30 September 2018) | 100% to 200% |
Offshore penalties depend on the country involved. Full, unprompted disclosure gives the biggest reductions.
How far back can HMRC go?
For offshore matters, HMRC can usually assess up to 12 years back, even for careless errors, and up to 20 years for deliberate behaviour.
The end of non-dom status
Since 6 April 2025, the remittance basis has been abolished and replaced by a residence-based regime. New arrivals can claim four years of relief on foreign income and gains if they have not been UK resident in the previous ten years. Others are taxed on worldwide income and gains as they arise. This makes it even more important to report overseas income correctly.
Example
Rahul, a UK resident, has a Dubai bank account earning £4,000 of interest a year that he never declared. After receiving an HMRC letter, he discloses eight years of interest through the WDF. Because he acted promptly and co-operated, his penalty is at the low end of the range.
Keeping records
Keep overseas bank statements, investment reports and evidence of foreign tax paid for each year you declare. HMRC may ask for them, and they are essential for claiming foreign tax credit relief.
Frequently asked questions
Do I need to declare foreign income if tax was paid abroad?
Usually yes. You may get foreign tax credit relief to avoid double taxation.
What if the money is a gift from family abroad?
Gifts are not income, but income earned on the money after you received it is.
Is a foreign pension taxable in the UK?
Usually, if you are UK resident, subject to tax treaties.
Will HMRC prosecute?
Prosecution is rare and reserved for serious cases. Prompt disclosure makes it much less likely.
Related: HMRC asking about money held overseas, is a foreign inheritance taxable and non-doms leaving the UK.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with offshore income disclosure. See our small business accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 16 October 2026. It is not personal advice, so speak to an accountant about your own situation.
