HMRC should spend more time and effort on tackling wealthy taxpayers who are evading paying taxes and not focus on ‘soft’ targets only, said national law firm Irwin Mitchell.
In reaction to a report released by the HMRC that describes how it deals with wealthy individuals, Phil Berwick, Tax partner at Irwin Mitchell, said:
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"The report highlights HMRC’s on-going drive to tackle "soft" targets. These taxpayers are making a significant contribution to the Treasury, but are being squeezed as HMRC pursue them for what they consider to be the ‘right amount of tax’. HMRC should also be targeting taxpayers who are evading tax and not making any contribution."
The report, ‘How We Deal With Wealthy Individuals‘, said HMRC defines wealthy individuals as those with a net worth of at least £20 million. It also claimed that there are 6,200 individuals in this category within the UK.
HMRC said that wealthy individuals collectively pay £3 to £4 billion a year in personal income and Capital Gains Tax.
Furthermore, the report said HMRC’s High Net Worth Unit (HNWU) has brought in more than £1 billion in additional revenue since it was formed.
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By GlobalData| Year | Additional revenue | Target |
|---|---|---|
| 2009 to 2010 | £85 million | £80 million |
| 2010 to 2011 | £162 million | £153 million |
| 2011 to 2012 | £200 million | £195 million |
| 2012 to 2013 | £222 million | £200 million |
| 2013 to 2014 | £268 million | £210 million |
Source: HMRC
It also stated that there has been an increase in wealthy individuals filing their tax returns on line and on time.
In the last five years the number of outstanding tax returns has reduced from 11.9% to 3.4%, said the report. Overall, a total of 96.4% of wealthy individuals file online – an increase of ten per cent in four years.
HMRC’s HNWU was set up in 2009 to handle the tax affairs of the UK’s richest people. The unit has increased the revenue it’s brought in year-on-year to £268 million in 2013 to 2014 – a 20% increase on the previous year.
The unit has a number of specialist teams. These include a Finance division, which focuses on individuals connected to the finance sector, and a Rising Stars team, which deals with people who have rapidly increasing wealth and who are expected to meet the HNWU’s wealth criteria in the next few years.
The HNWU has increased the revenue it’s brought in year-on-year to ??268 million in 2013 to 2014 – a 20% increase on the previous year.
