HMRC’s yield from investigations into wealthy individuals hits record
HMRC has experienced an increase in its revenue due to further investigations in the year 2018/19.
HMRC has experienced an increase in its revenue due to further investigations in the year 2018/19.
HMRC’s yield from inquiries into wealthy individuals in 2018/19 boosted in comparison to the previous year – hitting £1.8bn. The year 2017/18 generated a yield of £1bn from compliance activities in relation to wealthy individuals.
Following the leak of the Panama Papers, compliance checks led by HMRC had risen, generating an increase in government revenue. Further investigations into wealthy individuals have also opened a series of new inquiries into suspected individuals involved in tax offences. The drastic increase of investigations reflects on global data sharing agreements which have produced further transparency into the tax sector.
The radical jump in compliance revenues for wealthy customer segment between the year 2017/18 and 2018/19 was due to £0.6bn being allocated which had previously been ‘unallocated,’ informs HMRC.
A more accurate method was used in 2018/19 to allocate compliance revenues to the various customer segments.
More data
Global data sharing agreements has allowed HMRC to gain access to a large amount of data, opening doors to further investigations into wealthy individuals. The window of opportunity has enabled HMRC to identify cases and complete inquiries efficiently, collecting more tax from compliance activities.
Global law firm Pinsent Masons believes data leaks such as the Panama Papers have become a key lead to HMRC’s investigations.
In its 2018/19 annual report, HMRC investigations are expected to yield an additional £190 million and have opened inquiries into 190 people suspected of tax offences, in addition to the 215 investigations already open.
Steven Porter, Partner at Pinsent Masons, said “HMRC’s data-led approach is proving incredibly effective – the taxman’s reach has never been longer than it is now. It can ask for data on taxpayers from every tax haven and almost every country in the world.”
“The surge in yield from investigations may also reflect HMRC’s multi-faceted approach to compliance amongst wealthy individuals. 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,” he added.
The law firm suggests HMRC’s growing database is due to a rising number of sources.
“HMRC’s Connect database also continues to gather information from an increasingly wide range of sources. Connect can now cross reference up to 22bn lines of data including tax returns, property and financial data,” Masons said.
The firm stated “HMRC willingness to not only investigate but also enforce and prosecute, shows its continued use of the stick over the carrot when pursuing wealthy individuals.”
The Common Reporting Standards (CRS) have enabled HMRC to improve its efficiency, in which financial data is now shared by more than 100 countries. In 2018 alone, CRS flagged the accounts of three million UK taxpayers, Pinsent Masons said.