Tax

HMRC Hunts High Net Worth Individuals Over £1.9 Billion In Unpaid Taxes

Josh O'Neill Reporter 1 November 2016

HMRC Hunts High Net Worth Individuals Over £1.9 Billion In Unpaid Taxes

HMRC is clamping down on the UK's richest people as it announces details of its probe into the tax affairs of those with more than £20 million of wealth.

HMRC is chasing almost £2 billion ($2.44 billion) of potentially owed taxes by high net worth individuals in the UK, according to a report published by the National Audit Office.

The UK’s tax collector estimated that it raised £416 million in taxes from those with wealth of more than £20 million in 2015 – the figure formerly required by the tax authority to be classed as a HNW individual until the threshold was lowered to £10 million in 2016 - significantly exceeding its initial target of £250 million.

HNW individuals often have complex tax affairs that are challenging for HRMC to interpret as they generally have more choice about how they manage their income and assets compared with the average taxpayer.

However, HMRC has now kick-started efforts to recover approximately £1.9 billion by investigating risks posed by HNWI relating to tax avoidance and legal interpretations of intricate tax issues, the NAO said.
Some £1.1 billion of this concerns the use of marketed avoidance schemes, with around 15 per cent of HNWI having used at least one of these schemes, and HMRC is making “good progress” in tackling their use, it said.

A formal enquiry carried out by HMRC is currently examining around a third of HNW taxpayers, with an average of four issues being inspected per individual, and could take several years to complete.

At the start of the 2015-2016 financial year, HMRC estimated there to be around 6,500 HNWI by its own definition in the UK, roughly 0.02 per cent of all taxpayers. In the 2014-2015 financial year, HNW individuals paid over £4.3 billion in tax, including £3.5 billion in income tax and national insurance, and £880 million in capital gains tax.

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