HMRC probes pull in nearly £2bn from wealthy
2 Sep 2019
Data from leaked documents as well as global information sharing agreements have helped boost the UK’s public coffers by £1.9bn following investigations into the tax affairs of wealthy individuals, according to law firm Pinsent Masons
2 Sep 2019
HMRC’s yield from investigations into wealthy individuals increased 58% last year, to a record £1.9bn in 2018/19, up from £1.2bn the previous year, the international law firm says.
The government tax collecting agency has seen a surge in the amount of financial information it holds on wealthy individuals as a result of global data sharing agreements, which has enabled it to identify cases and complete investigations more quickly. This has led to a jump in the amount of extra tax collected from its compliance activities.
Pinsent Masons says data leaks such as the Panama Papers have also become a key source of evidence for HMRC’s investigations. Investigations following the leak have yielded an additional £190m for HMRC, with a further 215 investigations still ongoing, the firm says.
Steven Porter, a partner at Pinsent Masons, says: ‘HMRC’s data-led approach is proving incredibly effective – the taxman’s reach has never been longer than it is now.’
HMRC’s Connect database also continues to gather information from an increasingly wide range of sources. According to Pinsent Mason, the database can now cross reference up to 22bn lines of data including tax returns, property and financial data.
‘Data is used to cross-check returns and sometimes letters are simultaneously pumped out asking individuals to confirm information they don’t need to confirm – mistakes can easily be made which can leave taxpayers exposes to investigations,’ Porter says.
An HMRC spokesperson said: 'There’s nothing wrong with having investments overseas as long taxpayers declare all taxable income and gains. Most people pay the tax that’s due, which is why it’s important that HMRC takes action on the dishonest minority who try to hide money offshore.'
At the same time, figures published by UHY Hacker Young following a freedom of information request reveal that individuals in the self-assessment system owe £1.6bn in late tax payments so far for the 2017/18 tax year.
The amount is expected eventually to surpass the £1.83bn recorded for the 2016/17 year as more tax returns are submitted, the accountancy firm says.
Money owed by people who missed the tax payment deadline of 31 January has been rising for the past three years, up from £1.76bn in 2015/16 and £1.65bn the year before.
The accountancy firm put the rising trend down to economic difficulties faced by many taxpayers as well as the rise in the number of self-employed taxpayers or those that are new to the system and are struggling to complete returns and pay on time.
An HMRC spokesperson said: 'We want people to pay on time rather than receive penalties. If customers are unable to pay on time, they may avoid penalties by contacting HMRC as soon as possible and we can discuss whether it might be possible to set up a payment plan.’
By Philip Smith