The Revenue received £121m through investigations into foreign bankers and hedge fund managers this year, according to data obtained by law firm Pinsent Masons.
This was up from the £117m received by HMRC’s expat team – which investigates non doms, the vast majority of whom work in investment banks, hedge funds and private equity firms – in the previous year.
This is despite the fact City bonuses declined dramatically, down from an estimated £4.4bn during the 2011 "bonus season" to £1.6bn for bonuses paid out during the 2012/13 bonus round, says Pinsent Mason.
Chancellor George Osborne announced in last week’s Autumn Statement measures to end the abuse of dual contracts. He said that from April 2014, the government will take legislative measures to prevent a small number of high-earning, non-domiciled individuals from avoiding tax through the artificial division of the duties of employment between the UK and overseas.
Ray McCann, partner at Pinsent Masons, said the targeting is “no surprise” as HMRC is set evermore ambitious tax yield targets.
However, he said, “There is a balance that needs to be struck here – if HMRC gains a reputation for excessively aggressive and intrusive investigations into expats' tax affairs, then that could harm London’s attractiveness as a global financial centre, especially when added together with other changes that impact mainly on those from overseas living in the UK, such as the remittance basis charge.”
“The chancellor's Autumn Statement announcement of a ban on dual contracts should boost HMRC’s take from expats a little, and may go some way to offsetting the impact on tax revenues of the new Europe-wide bonus cap coming into effect in 2014.”