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One Third of UK’s Rich Under Tax Scrutiny
One Third of UK’s Rich Under Tax Scrutiny

One Third of UK’s Rich Under Tax Scrutiny

One Third of UK’s Rich Under Tax Scrutiny

One third of the wealthiest people in the UK are currently under investigation by the country’s official tax collection agency, according to a report late Tuesday by the country’s National Audit Office.
The tax collecting HM Revenue & Customs launched a specialist unit in 2009 which studies the tax accounting of the UK’s 6,500 richest individuals. This is a group which makes up only 0.02% of the population and counts over £20 million ($24.5 million) worth of assets apiece, CNBC reported.
The dedicated unit uncovered an additional £416 million of tax for collection in 2015 to 2016 on top of what was paid voluntarily by these individuals. This is a more than doubling of the £200 million secured by similar investigations four years earlier.
It was also a sum that came in far ahead of the HMRC’s internal target of £250 million for the period.
Tina Riches, national tax partner at financial affairs adviser Smith & Williamson, told CNBC via telephone that the theme of tax entities keeping a closer watch was not just restricted to the UK.
According to Riches, “Across the board all tax authorities are trying to step up a gear in terms of pursuing any taxpayer where they feel they can squeeze some extra tax out of them.”

 Change of Direction
Turning to the UK specifically, she noted while the first strategic objective for HMRC had been simply to “maximize revenues”, this mandate was expanded in February 2016 to “maximize revenues due and bear down on avoidance and evasion.”
This prioritization to tackle what in some cases may be considered routine tax planning is said to have marked a notable change of direction for the agency.
The report was keen to emphasize that the discrepancies primarily relate to tax avoidance schemes and the legal interpretation of complicated tax issues rather than outright–and illegal–tax evasion.
The complexity of some cases and the high amount of capital at stake mean that investigations can drag on at length, with 4,000 now having been open for over three years. The report also stated that an average of four issues are being looked into for each taxpayer involved in the probe.
Further complexities concern even the initial identification of high net worth individuals as reporting is not required for most of the information about their wealth, including sources of income or assets owned.
The risk to HMRC of targets slipping under the radar is evident from the unit’s uncovering of an additional 1,000 people with net worth above the £20 million cut-off point.
The report notes that by March 2016, HMRC had issued 1,400 accelerated payment notices to high net worth individuals with the average value of such a notice to a high net worth individual being around £450,000, compared with £75,000 for the broader population.

 

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