New report published on high n

New report published on high net worth individuals

HMRC’s High Net Worth Unit (HNWU) is a specialist division that was established in 2009 to deal with taxpayers who have wealth in excess of £20 million. The threshold changed to £10 million during 2016-17.

New report published on high n

HMRC uses details from tax returns and other public information databases to identify some 7,500 of the country’s highest taxpayers who are handled by the HNWU. In certain circumstances, HMRC will also handle family members connected to a high net worth individual from within the HNWU.

The public accounts committee (PAC) has published a new report that reveals the startling fact that since the HNWU was established the amount of tax paid by this group has actually fallen by £1 billion. HMRC has enquiries open into about a third of all high net worth individuals at any one time, and is investigating cases with a potential value of £1.9 billion. Since 2012, HMRC has issued 850 penalties totalling £9 million to high net worth individuals; an average penalty of £10,500.

The PAC report put forward a number of conclusions and recommendations including the following:

  • HMRC’s lack of transparency has eroded public trust in a fair tax system and makes it more difficult for the department to explain what it does well.
  • HMRC’s approach to dealing with the very wealthy suggests that they get help with their tax affairs that is not available to other taxpayers.
  • HMRC has not been tough enough in dealing with tax evasion and avoidance by the very wealthy, and it does not know whether its activities are enough to deter non-compliant behaviour.
  • Collecting the right amount of tax from high net worth individuals is made harder because they do not have to declare details of their wealth.

HMRC also runs a separate Affluent Unit that examines the tax affairs of taxpayers who had wealth of at least £2.5 million and an annual income of £150,000 or more. If you are rich enough to be looked after by one of these specialist teams be aware that you will likely be subject to far greater scrutiny than the average taxpayer.

HMRC confirmed that it had been looking at what further information high net worth individuals could be required to report to help improve its understanding of their wealth.

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