Chancellor George Osborne is set to crack down on non-compliance among those with £10m to £20m in liquid assets, tax experts have warned.
Sean Wakeman, tax investigations partner at Crowe Clark Whitehill, said since launching the special task force to tackle non-compliance among those whose net-worth was more than £20m, the bar seems to have been lowered to those in the next wealth bracket down.
He said: “We are already seeing considerable growth in HMRC interest in this bracket. Generally speaking, ultra high net worth individuals are able to buy advice more easily.
“It is therefore not surprising that we are seeing HMRC inspectors lowering their sights somewhat having spent five years unprofitably pursuing these individuals.”
However, despite the remit of the special task force to reclaim ‘lost revenue’ to the Treasury, Mr Wakeman said he did not think HMRC would recoup as much as it has invested.
According to latest estimates, the government will have spent part of £60m by 2020/21 to clamp down on non-compliance. However, Mr Wakeman said focusing on the £10m to £20m bracket would not bring in a decent return, “certainly nowhere near the expected £600m”, he added.
The recent Summer budget proposals referred to tripling the number of criminal investigations to 100 per year by the end of this parliament and focussing prosecutions on wealthy individuals and corporates.
But Mr Wakeman called this “indiscriminate positioning of criminal culpability”, branding it both “naïve and misjudged”.
“In my experience”, he said, “it is not possible to compartmentalise tax evaders so easily. They come from every social strata and wealth background.
“The only positive note here is that HMRC will also extend its use of dedicated customer relationship managers to individuals in the £10-£20m wealth bracket.
”Any move by HMRC to engage with taxpayers and their agents is to be welcomed. Our experience of CRMs is very good. This will hopefully result in better communications and early closures of investigations.”
Joan Foster, Tax Partner for national firm Baker Tilly, said tax planning would be ever more important for people living and working overseas.
She said: “What taxpayers need to make tax efficient decisions is certainty; something that has become ever more important as members of UK families increasingly migrate abroad.
“It is imperative that taxpayers seek advice to ensure that they use the right vehicle that provides a tax efficient result both in the UK and other territories of those who are deemed to benefit from the investment.
