Commuter belt St Albans worst offender for tax avoidance
Leafy Hertfordshire commuter town St Albans leads the UK for individuals admitting unpaid tax in terms of raw population, followed by Edinburgh and Slough
18 Feb 2019
Research by UHY Hacker Young shows there were 24 disclosures of unpaid tax per 100,000 population in St Albans last year. Edinburgh was second with 23, followed by Slough with 19.
London (15 per 100,000), Bristol (14) and Oxford (14) also featured in the Top Ten (see table below).
St Albans is part of the wealthy commuter belt that spans Hertfordshire, Buckinghamshire and Essex, and is home to many City workers with good train connections.
The city is one of the more expensive residential property spots in the UK where average house prices exceed £500,000, with famous residents including actor Rupert Grint, and musicians Cheryl Cole and Zayn Malik.
UHY Hacker Young says that postcodes with high numbers of disclosures tend to be wealthier with residents that have complex tax affairs. These individuals are more likely to make a disclosure.
HMRC’s crackdown on the use of tax planning schemes by high net worth individuals (HNWI) may have driven the number of disclosures in some areas by prompting individuals to come forward.
If a taxpayer comes forward voluntarily then HMRC is likely to be more lenient when issuing penalties.
UHY Hacker Young says HMRC has put significant resources into investigating the affairs of HNWI in recent years. HMRC has several specialist teams dedicated to this taxpayer group, including the new Offshore Corporate and Wealthy Unit, which launched over 800 investigations last year.
England and Wales saw 11 disclosures per 100,000 population on average last year, with a total of approximately 6,380 disclosures made overall.
Andrew Snowdon, partner at UHY Hacker Young, says: ‘Tax avoidance is not restricted to super-rich neighbourhoods of London such as Kensington and Chelsea.
‘A lot of middle income earners have been sucked into tax schemes over the last two decades.
‘Some very normal commuter belt towns like Slough are minor hotspots for admitting unpaid tax which may reflect their residents’ views on the rising tax burden in areas like income tax and stamp duty land tax (SDLT).
‘Coming forward to make a tax disclosure is a far better option as HMRC is prone to take a much more lenient approach if a disclosure is made unprompted. A prompted disclosure could result in fines of up to 100% of the tax owed.’
Making a disclosure is almost always the best way to deal with an irregular tax position but it is important to seek professional advice before doing so in order to get the best possible settlement as HMRC is not the easiest to negotiate with and there will be arcane tax regulations and so-called guidance which means it can be high risk policy for a novice to try to sort. Using an adviser almost invariably will reduce the tax liability and ensure the taxpayer is able to negotiate a reasonable deal.
Top Ten UK towns and cities for highest number of individuals admitting unpaid tax – disclosures per 100,000 population
Source: UHY Hacker Young
Report by Sara White