Government goes after £2bn of taxes unpaid by UK’s richest

The taxman is going after £2 billion in taxes unpaid by the super-rich, according to the public spending watchdog.

More than half of the cash is linked to aggressive tax avoidance schemes, according to the National Audit Office (NAO).

It assessed the work of a team dedicated to collecting taxes from high net worth individuals, with around 6,500 people worth more than £20 million falling into the bracket last year.

NAO boss Amyas Morse said: “The tax affairs of the wealthiest in society are complex, making it harder for HMRC to ensure they are paying the right amount of tax.”

HM Revenue and Customs, which is dealing with disputes over how much tax should be paid, estimates that its specialist unit dedicated to collecting tax from high net worth individuals raised £416 million from its compliance work in 2015-16.

The data, published in a report published today by the NAO, is separate from tax already voluntarily declared by the individuals.

As the specialist unit expands its activities, HMRC said it needs to do more to identify the most effective approaches to maximising the tax revenue paid by the very wealthiest people in the UK.

A statement accompanying the new NAO report, said: “High net worth individuals often have complex tax affairs and they generally have more choice over how they manage their income and assets than the average taxpayer. It can be challenging for HMRC to understand their tax affairs and assess if there are any risks to address.”

In 2009, HMRC established a specialist unit to manage the tax affairs of high net worth individuals to give it a better understanding of the overall tax position of high net worth individuals and their behaviour. At the start of 2015-16 HMRC considered there to be around 6,500 high net worth individuals, roughly 0.02 per cent of all taxpayers.

The amounts of tax revenue that are at stake are significant.

In 2014-15, high net worth individuals paid over £4.3 billion in tax. This included £3.5 billion in income tax and national insurance (1.3 per cent of the total revenue for those taxes) and £880 million in capital gains tax (15 per cent of all CGT). HMRC does not record other types of tax that are collected, such as Inheritance Tax, in a way that easily allows it to identify the amounts paid on high net worth individuals’ wealth.

HMRC is investigating risks from high net worth individuals with a potential value of £1.9 billion. This figure is an initial estimate of the tax that could be due and covers more than one tax year. £1.1 billion of this relates to the use of marketed avoidance schemes; around 15 per cent of high net worth individuals have used at least one scheme, HMRC said.

Amyas Morse added: “While the yields from HMRC’s work in this area have increased it needs to evaluate what approaches are the most effective and to understand the outcomes it achieves.”