On Monday 20 September Chief Secretary to the Treasury Danny Alexander announced new plans to tackle non-compliance in the tax system.
On Monday 20 September Chief Secretary to the Treasury Danny Alexander announced new plans to tackle non-compliance in the tax system. The Government will make an extra £900m available to expand the HMRC High Net Worth Unit, aiming to investigate and catch those hiding money offshore and increase the number of criminal prosecutions against tax evaders fivefold. According to experts at accountancy firm Saffery Champness, the announcement represents an interesting return to a previously abandoned policy.
Ronnie Ludwig, partner in the private wealth group at top 20 accountancy firm Saffery Champness, comments:
“The announcement that additional funding is to be allocated to the High Net Worth Unit will be welcome news for HMRC staff, as they struggle to close the tax gap. The High Net Worth Unit will expand and shift its focus from dealing with the financial affairs of Britain’s 5,000 wealthiest taxpayers to scrutinising the affairs of all 150,000 higher rate taxpayers in the country, a 30-fold increase in the target group.
“An intriguing point is that the High Net Worth Unit itself was created in 2009 to replace the Complex Returns Unit, abolished because it was felt that the unit encompassed too many taxpayers and was inefficient as a result. Expanding the remit of the High Net Worth team would effectively reverse that decision.
“It remains to be seen how effective this expansion of the High Net Worth Unit will prove, but the message is clear. HMRC is getting ever-increasing access to information on individuals’ financial affairs and taxpayers who have been concealing funds, either deliberately or in ignorance of the rules, would do well to come forward voluntarily and regularise their tax affairs now.
“Under the latest rules, offshore tax evaders face penalties of up to 200% of all unpaid tax when caught; but coming forward and cooperating with HMRC is likely to drastically reduce penalties.
“Those with funds kept in Liechtenstein can also make use of the ongoing Liechtenstein Disclosure Facility (LDF), an opportunity for those with unpaid tax linked to investments or assets in Liechtenstein to come forward and settle their tax affairs in the UK under preferential terms. The LDF will run until 31 March 2015 and will cap penalties on unpaid tax at 10% of tax evaded over the past ten years provided the taxpayer makes full disclosure of his or her financial dealings.”