Latest news with #wealthyindividuals
Daily Mail
a day ago
- Business
- Daily Mail
HMRC ramps up special investigations into the wealthy with AI and helps it claw back £1.5bn in tax in ONE YEAR
An increase in investigations into wealthy people's finances by HM Revenue & Customs yielded £1.5billion in extra tax receipts in one 12-month period, a law firm analysis claims. HMRC more than doubled the amount of tax it raked in via special investigations in the financial year ending 5 April 2024. In the previous tax year, it raised £713million via probes. In a bid to root out hidden income stashes and resolve unpaid tax bills, HMRC is increasingly turning to artificial intelligence and overseas tax authorities, according to experts at law firm Pinsent Masons. The tax authority is utilising a system called the 'Connect Computer System' to assist with its tax collection. The CCS, a computer software system, cross-references business' and people's tax records with other databases to establish fraudulent or undisclosed activities. When hunting for overseas income or assets, HMRC uses initiatives like the Common Reporting Standard and Global Forum, which ensures it is automatically notified when British taxpayers move assets to jurisdictions party to the agreements. In Britain, HMRC deploys its wealthy and mid-sized business compliance directorate team to weed out hidden wealth stashes and get unpaid tax paid. Pinsent Masons told This is Money that HMRC now 'regularly' receives information from overseas, including tax havens, on wealthy Britons. This information is then cross-checked with self-assessment returns data. The specialist HMRC team defines wealthy individuals as people with annual incomes of £200,000 or more in any of the last three years, or those with assets above £2million in any of the last three years. According to Pinsent Masons, the total amount of money collected by HMRC in tax from wealthy taxpayers rose to £5.2billion in the tax year ending 5 April 2024, up from £4billion in the previous tax year. An HMRC spokesman told This is Money: 'It's our duty to ensure everyone pays the right tax under the law, regardless of wealth or status. 'The Government is delivering the most ambitious ever package to close the tax gap and bring in an extra £7.5billion for public services per year by 2029-30.' In recent years, HMRC has been doubling down on its mission to root out concealed income and chase down unpaid tax more proactively. HMRC defines the 'tax gap' as the difference between the amount of tax that should, in theory, be paid to HMRC, and the amount that is actually paid. In the tax year ending 5 April 2023, the tax gap among wealthy people in Britain was estimated to be around £1.9billion. To close the tax gap further, HMRC will be upping its efforts again this year to ensure tax coffers are maximised. During the Spring Statement in March, Rachel Reeves announced that HMRC would get a cash injection of nearly £180million to help close the tax gap. The Spring Statement included £100million in new funding to recruit hundreds more compliance officers and experts tackling wealthy people, plus £79million to spend on third-party debt collectors over the next five years. The measures will enable the tax authority to chip away at unpaid tax liabilities that stood at more than £44billion at the end of December 2024. According to documents published alongside the Spring Statement, about £20billion worth of unpaid tax liabilities are more than 12 months old. The new HMRC hires are expected to net the Treasury £95million in 2029-30, accounting for the costs of hiring and training new recruits. Rachel Reeves unveiled £40billion worth of tax hikes in last autumn's Budget. Ian Robotham, legal director in tax disputes and investigations at Pinsent Masons, said: 'HMRC have been set some very hard targets for extra tax collection by the Chancellor. 'It is hard to see how they can achieve those targets without a sharp rise into tax investigations into the wealthy.' He added: 'The scale of specialist investigations into wealthy taxpayers shows HMRC has already been clamping down much harder on those suspected of underpaying tax. 'Wealthy taxpayers who know they have tax issues to settle should urgently seek professional advice. 'Penalties in respect of inaccuracies can be mitigated down where taxpayers are proactive in contacting them to tell them about and assist them in resolving inaccuracies.'
Telegraph
16-05-2025
- Business
- Telegraph
Tax crackdown on ‘wealthy' pockets £5bn for Reeves
The tax office raked in an extra £5.2bn last year as part of a crackdown on wealthy individuals. In recent years, HM Revenue and Customs (HMRC) has zeroed in on high net worth individuals it suspects of underpaying tax. HMRC defines a wealthy individual as someone earning more than £200,000 a year or with assets over £2m in any of the last three years. There were 850,000 wealthy individuals in 2023-24 who together paid £119bn in personal taxes – a quarter of the nation's personal tax bill. Since 2019-20, the amount of revenue HMRC has collected from wealthy individuals through investigations and other compliance work has shot up from £2.2bn to £5.2bn. In a report out on Friday, the National Audit Office said the significant revenue increase suggested that levels of 'non-compliance' from wealthy individuals could be much higher than previously thought. HMRC is under growing pressure to raise revenue for the Treasury with Rachel Reeves facing a £57bn black hole in the public finances. The public spending watchdog urged the tax office to develop 'a clear strategic vision and plan' for tackling errors and avoidance among the wealthy in order to achieve the Government's aim of closing the tax gap. However, Tim Stovold, of accountancy firm Moore Kingston Smith, said the pool of wealthy taxpayers was likely to have shrunk since the non-dom status was scrapped. Wealth managers have already reported an increase in clients leaving the UK because of changes to the non-dom regime, which allowed foreigners to avoid paying tax on overseas income. The Office for Budget Responsibility has projected the tax raid will bring in £33bn for the Treasury, however, it estimates only 12pc of non-doms will leave the UK. A recent report by the Centre for Economics and Business Research warned that if the proportion exiting the country ends up higher than expected, the non-dom reforms could actually cost the Treasury billions. Mr Stovold said: 'Now that so many wealthy individuals have indeed left for more benign tax regimes, the tax take due to be collected from this population will already have been severely reduced.' He went on: 'The report recommending that HMRC develop a clear strategy for tackling non-compliance from the wealthy who remain here, is an approach that must be taken to protect tax revenues – but a balance has to be struck lest the UK is perceived as a hostile place for wealthy people. 'A reputation as a hostile nation will deter the successful and the wealth creators from choosing to make their home here in the future and will encourage more to leave with a corresponding dent in the nation's finances.' In recent years, HMRC has shifted its focus to high-value investigations. Its 'wealthy team' – responsible for ensuring high net worth individuals pay the right amount of tax – closed almost 9,000 compliance investigations in 2023-24, bringing in £93,800 on average, whereas in 2018-19 it raised £34,000 on average from nearly 16,000 investigations. Meanwhile, 25 wealthy individuals were prosecuted following a criminal investigation by HMRC, up from five in 2021-22, in a sign the tax office is taking a tougher stance against tax fraud. The Government has given HMRC funding to recruit 5,500 extra compliance staff over the next five years in a tax crackdown. Earlier this year, the tax office announced some steps to tackle offshore tax avoidance by the wealthy, including recruiting wealth management experts and deploying artificial intelligence. The NAO reports on the financial accounts of HMRC every year. It also examines whether it is delivering value for money for the taxpayer. In another report published earlier this year, it warned that Britain's 'increasingly complex' tax system was costing businesses £15.4bn annually. HMRC said the report acknowledged the progress it had made to bring in additional revenues from the wealthy, and it would respond formally to the NAO's recommendations by the autumn. An HMRC spokesman said: 'It is our duty to ensure everyone pays the right tax under the law, regardless of wealth or status. The government is delivering the most ambitious ever package to close the tax gap and bring in an extra £7.5bn for public services per year by 2029-30.'
