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HMRC's Clampdown On HNWIs Intensifies

by Robert Lee,, London

01 May 2015

HM Revenue and Customs (HMRC) has intensified its clampdown on suspected tax avoidance amongst High Net Worth Individuals (HNWIs) through its 'Rising Stars' unit, international law firm Pinsent Masons said.

The 'Rising Stars' team was created in 2012 to investigate the tax affairs of individuals with rapidly rising incomes and a net worth of at least GBP15m (USD23m), as well as anyone who has the potential to meet the GBP20m wealth criteria for the High Net Worth Unit within the next five years.

According to Pinsent Masons, 51 enquiries were launched by the 'Rising Stars' team in 2013-14, up from 38 in the previous year. Investigations resulted in the collection of GBP6.6m extra tax in 2013-14, a 35 percent increase on the GBP4.9m collected in 2012-13.

Fiona Fernie, Partner and Head of Tax Investigations at Pinsent Masons, commented: "Creating the Rising Stars team means that HMRC has left virtually no part of the million plus market escaping scrutiny."

Fernie explained that the HMRC units focused on HNWIs tend to have a smaller ratio of taxpayers to staff, meaning that resources are more concentrated and investigations bear more fruit. In addition, sophisticated technology, such as the GBP45m database system "Connect," which collects real-time data, helps in the identification of HNWIs for investigation. HMRC also made 490 requests for information on taxpayers from foreign governments in 2013.

Fernie said: "HMRC is now drawing on wider range of information to identify targets for investigation - those with complex tax affairs and offshore wealth are increasingly likely to come under the spotlight as a result. Connections between those involved with tax avoidance are now more easily detected. Taxpayers linked to a particular firm or business may be targeted - if one hedge fund manager or employee is found to be worthy of investigation, for example, enquiries into his or her colleagues are likely to follow."

TAGS: individuals | compliance | Wealth | tax | investment | business | tax compliance | tax avoidance | law | financial services | entrepreneurs | United Kingdom | tax authority | offshore | professionals | HM Revenue and Customs (HMRC) | revenue statistics | HM Revenue and Customs (HMRC) | services

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