New research suggests that more entrepreneurs and professionals are coming under the scrutiny of specialist units at HM Revenue & Customs (HMRC), which could increase the chance of tax investigations.
Law firm Pinsent Masons analysed data provided by HMRC and found that its Affluent Unit collected £137.2 million in additional tax from investigations in 2013-14, up by 60 per cent from £85.7 million in 2012-13.
HMRC launched the Affluent Unit in 2011 to target wealthy taxpayers with income too low for them to be scrutinised by HMRC’s High Net Worth Unit, which focuses on taxpayers with assets of more than £20 million.
The Affluent Unit investigates the tax affairs of UK residents with an annual income of more than £150,000 or wealth of over £1 million, a total of around 500,000 people.
Pinsent Masons said the unit had doubled in size in 2013 through the recruitment of 100 more inspectors and the private wealth limit was reduced downwards from £2.5 million to more than £1 million.
James Bullock, head of litigation and compliance at Pinsent Masons, said on 26 January: “This surge in extra revenue from Affluent Unit tax investigations serves as a reminder that HMRC is widening its lines of inquiry.
“People who would just consider themselves moderately successful professionals and businesspeople are now also coming under the scrutiny of HMRC’s specialist units. HMRC is leaving no stone unturned in terms of searching for taxes which it believes should have been paid.”
HMRC has also launched several voluntary disclosure campaigns targeting specific groups of professionals in recent years, including the Solicitor’s Tax Campaign announced in December, under which legal professionals are being urged to come forward and voluntarily declare and pay any undisclosed income before a 9 June deadline, or face heavy penalties.
In the event of a tax investigation, working with the experts at Taxation-Investigation can help to clarify the taxpayer’s position and identify their options.
We’ll provide constructive advice and support, enabling taxpayers to focus on their day-to-day affairs while we liaise with HMRC inspectors to bring the investigation to a satisfactory conclusion. Where tax affairs are in order, we will argue the case robustly and we will also negotiate any settlement necessary with a view to minimising HMRC claims for any tax and penalties. For more information, please contact us.