HMRC’s yield from investigations into wealthy individuals hits record

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’s yield from investigations into wealthy individuals hits record

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.

 

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource