HM Revenue & Customs received £1.2bn ($1.58bn, €1.35bn) from high net worth individuals in 2017/18, up from £919m in 2016/17 according to research from accountants UHY Hacker Young.
The Revenue has been ramping up investigations into high net worth taxpayers following a 2017 parliamentary report which found that HMRC’s crackdown on this taxpayer group was not as successful as it could have been.
MPs called on HMRC to:
- Conduct more investigations into the rich and impose more penalties, as not enough is currently being done to change behaviour;
- Impose greater penalties on wealthy tax avoiders to act as a deterrent; and,
- Focus on particular groups within the high net worth community, such as professional footballers.
Easy political targets
Commenting on the research Andrew Snowdon, partner in UHY Hack Young’s London office and head of tax, said: “HMRC see high net worths as a segment of the market that it can target in a more persistent and aggressive manner than other categories.
“Given that there is little public sympathy for tax avoidance amongst the wealthy, HMRC know that its tough approach towards this group of taxpayers is unlikely to be reined in.
“HMRC are using every tool in its toolbox, including controversial accelerated payment notices (APNs), which allow it to collect large amounts of disputed tax before an investigation is concluded or a tribunal has agreed that HMRC can take the tax.
“APNs are heavy-handed but very lucrative for HMRC.”
Under an APN taxpayers have 90 days after receiving a notice to pay the disputed amount without recourse to appeal.
According to Snowdon, offshore bank accounts are another rich seam for tax inspectors to mine for information on the very rich.
“HMRC will receive data from another wave of countries later this year,” he added.
“HMRC’s hunger for more data on taxpayers is reflected in its latest proposals, which would allow it to collect data from any business or organisation without any oversight – an alarming prospect.
“Although HMRC’s aim to maximise revenues is important, it needs to be careful,” concludes Snowdon. “Ultra-high net worths are extremely (internationally) mobile and too tough a tax regime may impact the UK’s attractiveness as a centre for high net worths – which could be damaging both to the economy and tax revenues.”
A consultation on HMRC’s new powers under an Amendment to HMRC’s civil information powers runs until 2 October.
UHY Hacker Young’s data was collected from investigations into ‘self-assessment non-business’ by HMRC’s wealthy & mid-sized business directorate.