HMRC investigators are delving in to the financial past of company directors and executives from some of the UK’s biggest firms in a bid to uncover unpaid tax.
The amount at stake is thought to be around £400 million, say law firm Pinsent Masons.
Though the amount that will actually be reclaimed by HMRC is likely to be much lower, it is still predicted to lead to an upswing in HMRC-compliance activity against wealthy entrepreneurs.
Pinsent Masons say they have analysed data from the HRMC’s large business service – which looks after the taxes from 770 big organisations in the UK – and found that the unpaid tax bill relates to pay-as-you-earn (PAYE) and national insurance contributions.
The amount the tax investigators are looking for has rocketed by 43% from the £280 million that was under scrutiny last year.
Disguised remuneration
The lawyers say that HMRC is taking an interest where a person’s income or role within a company has been structured to reduce their tax burden; especially for their PAYE and national insurance contributions.
HMRC is looking at how firms have managed the tax issues around the 50p marginal tax rate because it brought in less than was expected and the government’s temporary special tax on bank bonuses.
Investigators also have new powers to look into disguised remuneration for company directors and executives.
Meanwhile, property landlords in the South East will be on alert after a special taskforce to investigate those who aren’t paying tax on their rental earnings was unveiled.
HMRC say they expect to recover around £4 million from the exercise.
They’ve been moved to act because rental profits are generally higher for landlords in the South East who are charging rents that average £1,000 a month – which is double the national average.
Small minority break rules
Investigators are also planning on looking at the profit made by landlords disposing of investment properties in the South East which may be subject to capital gains tax.
With property prices being higher in the region than elsewhere, and with demand from buyers remaining strong, HMRC believes there could be a lucrative amount of unpaid tax.
A spokesman for HMRC said: “Most people are paying the right amount of tax but there is a small minority that are not. We will find those who break the rules.”
He added that the recently announced taskforces looking into finding unpaid tax should lead to HMRC collecting more than £50 million.
Some recently announced HMRC tax investigations include looking in to the alcohol industry in Scotland and clothing manufacturers and wholesalers in the Midlands, North Wales and the North West.
