HMRC collected an extra £1.2 billion of tax through investigations into high net worth individuals (HNWIs), representing a 29 percent increase from the £919 million in 2016/17, according to UHY Hacker Young, a national accountancy group.
HMRC has increased its investigations into HNWIs following a 2017 Parliamentary report which found that HMRC’s crackdown on this taxpayer group was not as successful as it could have been.
Andrew Snowdon, partner and head of tax at UHY Hacker Young, said: “Given that there is little public sympathy for tax avoidance amongst the wealthy, HMRC knows that its tough approach towards this group of taxpayers is unlikely to be reined in.”
“HMRC is using every tool in its toolbox against HNWIs, including controversial 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.”
“Data on taxpayers’ offshore bank accounts is now being fed through to HMRC from tax havens as part of a global transparency drive and HMRC can use this data for its investigations into HNWIs. HMRC will receive data from another wave of countries later this year.”
“Although HMRC’s aim to maximise revenues is important, it needs to be careful. Ultra high net worths are extremely mobile and too tough a tax regime may impact the UK’s attractiveness as a centre for HNWIs - which could be damaging both to the economy and tax revenues.”
The report concluded that HMRC could collect more tax from HNWIs if it was tougher in its approach. In the report MPs asked HMRC to:
- Conduct more investigations into HNWIs and impose more penalties
- Impose greater penalties on HNWIs to act as a deterrent
- Focus on particular classes of HNWIs, such as professional footballers
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