HM Revenue & Customs (HMRC) is ready to target the wealthy with personal tax inspectors to help them with their financial affairs.
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HMRC has operated specialist tax offices for ultra-high net worth individuals with wealth of more than £20 million for several years, but now feels the time is right to extend the service to those with personal fortunes of between £10 million and £20 million.
Accountants are arguing that this is due to the arrangement failing to hit revenue targets because the richest taxpayers can afford the best advice about how to manage their financial affairs to pay the least amount to HMRC.
“Our experience is the very wealthy can afford the best advice and are harder to investigate for HMRC, whereas lowering their sights to what they could see as easier targets is a natural progression,” said Sean Wakeman, tax investigations partner at Crowe Clark Whitehall.
Personal tax managers
“We are seeing a lot more activity from HMRC in relation to wealthy individuals with a slightly lower net worth.”
HMRC is appointing ‘customer relationship managers’ to individuals worth more than £10 million, explained Wakeman.
“This is good for clients because we feel that having a dedicated manager helps with smooth communications between clients and HMRC and also helps close investigations more quickly,” he said.
Chancellor George Osborne announced in his Summer Budget that HMRC had won an extra £750 million in funding to help crack down on tax avoidance.
He also stated HMRC expected to increase the number of criminal prosecutions for tax evasion from around 30 a year to 100 a year by 2020.
More prosecutions
Many accountants believe the number of prosecutions should rise and fall to match the number of tax evasion offences rather than to hit a set target each year.
“It’s not that easy to predict the number of tax evaders. Just because you are wealthy does not mean you are not paying the tax you should. Tax evasion is committed by people at all levels of society.”
The Chancellor has extended the powers of HMRC to deal with tax evasion over the past few years.
He has invested more than £1.6 billion in manpower and technology to root out tax avoidance, increased penalties for failing to properly declare incomes and changed the law to ban many tax avoidance schemes.
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