Top earners are paying 60% more tax as HM Revenue & Customs (HMRC) special investigations tighten up on tax avoidance.
New figures from HMRC show the ‘affluent unit’ prised £137.2 million from some of Britain’s richest individuals last year after tax inspectors looked into the financial affairs of those earning more than £150,000 a year or who have wealth of at least £1 million.
The amount is an increase of £51.5 million over £85.7 million collected in the previous year.
The unit started work in 2011 to highlight tax avoidance by high earners who were not captured by inquiries run by the High Net Worth Unit which looks after the tax affairs of those worth £20 million or more.
Around 500,000 taxpayers have their finances scrutinised by the 200 strong affluent unit.
New powers
Tax experts are warning that the unit will claw back even more money from taxpayers in the affluent and high net worth groups as new powers to launch investigations kick in.
These powers include advance payment of tax for entrepreneurs or high earners joining tax avoidance schemes and the ability to seize cash from bank accounts to settle unpaid tax bills.
HMRC has also run several high profile tax disclosure campaigns offering discounted penalties to professionals such as solicitors, medical professionals and landlords who volunteer to put their tax affairs in order.
“This increase in the tax take from professionals and entrepreneurs shows that HMRC is striving to collect as much money as possible and is looking for the smallest evidence of any wrongdoing,” said James Bullock, head of litigation and compliance at lawyers Pinsent Masons.
“Investigators have already zeroed in on the wealthiest and it’s likely that now systems are in place for additional rate taxpayers that the next target will be higher rate taxpayers.”
Tax avoidance
In one swoop, HMRC has already demanded £1 billion in tax for cash ploughed into tax avoidance schemes by celebrities and footballers.
Around 100 investors in these schemes are facing bankruptcy as HMRC demands they repay tax savings on money invested mainly in film partnerships.
Some of the names involved include David Beckham, Wayne Rooney and Gary Lineker.
The lawyers warn that taxpayers risk investigations and prosecution for failing to declare their true income as HMRC’s sophisticated tax profiling software pools data from public services and financial firms that allows real-time cross-checking of tax returns for accuracy.
