The leak of over 11 million documents from Panama-based law firm Mossack Fonseca might be causing our politicians some difficulties, but they are not alone. Wealthy individuals who hid the extent of their wealth from their ex-partners could now also find themselves in trouble.
In a huge list, 37,000 names have been identified as being linked to Mossack Fonseca in the Panama tax haven – revealing how the super-rich are hiding assets worth billions of pounds in offshore companies. However, as well as trying to fool the tax-man, it seems that many of these clients also used their investment funds to hide and protect their fortunes during divorce settlements.
Of course, with the list of Mossack Fonseca clients now publically available, many divorce cases could now be re-opened. Indeed the case of one, now deceased, British tycoon has already been reported in the press, with the Panama Papers reportedly revealing that he hid £500 million from his wife with the help of Mossack Fonseca in a “game of hide and concealment”.
While the law demands transparency when it comes to the disclosure of assets during the divorce process, it seems that not everyone is quite as frank as they should be. When you add overseas assets, complex tax structures and jurisdiction issues into the mix, things can become tricky.
With the publicity surrounding the leak making it increasingly likely that such cases will be investigated properly, there could be repercussions for UK residents who have failed to correctly disclose their assets in offshore firms during divorce proceedings.
Interestingly, the revelations follow two landmark rulings at the end of last year, with the Supreme Court finding in favour of two women whose ex-husbands lied about the extent of their wealth during the divorce process. In these cases, while Alison Sharland and Varsha Gohil initially agreed to financial orders as part of their separate settlement agreements, it later transpired that their ex-partners had failed to make a full and frank disclosure as to the scope of their assets. Taking their battle all the way to the highest court in the land, the Supreme Court found in favour of the women, allowing their claims to be re-analysed.
Significantly, this has lead to many similar claims from aggrieved ex-spouses.
Over the years I’ve uncovered many a divorcing spouse try to hide assets through a variety of creative (and not so creative!) means, including hiding assets offshore, giving away assets to a third party (such as new partner or family member) and through the creation of complex corporate structures or trusts (particularly those held in oversees tax havens).
However, the courts have become increasingly robust when it comes to such non-disclosure, and in some instances, have even imprisoned divorcing husbands for trying to hide the true value of their assets. The latest leak should come as a warning to anyone who might be considering being less than forthright about their finances when divorcing their spouse.
At Linder Myers we can assist you in pursuing a claim against a dishonest spouse, or defend you against such claims to protect you and your assets now and in the future.