It comes after a report from the Public Accounts Committee (PAC) in January 2017, criticised HMRC for not being “tough enough in dealing with tax evasion and avoidance by the very wealthy”, while noting that tax receipts at the time had fallen by £1bn.
The PAC recommended that HMRC do more to prevent very wealthy taxpayers from “bending or breaking the law” and urged the government to address the taxation of image rights, impose greater penalties that multi-millionaires could be susceptible to, and increase the number of investigations and prosecutions of high-net worth individuals.
Andrew Snowdon, partner and head of tax at UHY Hacker Young, explained that one of the techniques HMRC has used in pursuit of the extra receipts is Acceleration Payment Notices (APN).
APNs have proved controversial because they allow the collection of large sums of contested tax before the conclusion of an investigation or agreement for the collection from a tribunal. Taxpayers are given 90 days to pay, without the chance to appeal.
Snowdon also gave some insight into HMRC’s investigative methods. “Data on taxpayers’ offshore bank accounts is now being fed through to HMRC from tax havens” he said, adding that “HMRC can use this data for its investigations into High Net Worths”.
He also described HMRC’s proposals to collect businesses and organisations’ data without any oversight as “an alarming prospect”.
Snowdon says HMRC uses a more aggressive manner with High Net Worths than other taxpayers – however this contrasts the PAC report. This pointed to services such as “customer relationship managers”, which it says could appear to suggest wealthy taxpayers receive more support than others.
Snowdon argued that as “there is little public sympathy for tax avoidance amongst the wealthy, HMRC knows that its tough approach towards this group of taxpayers is unlikely to be reined in.
“Although [its] aim to maximise revenues is important, it needs to be careful.”
He added that because Ultra-High Net Worths are extremely mobile, “too tough a tax regime may impact the UK’s attractiveness” as a centre for them - potentially damaging both the economy and tax revenues.
A HMRC spokesperson said the revenue, "Has a very strong track record on challenging contrived tax arrangements and non-compliance and we make sure that individuals and businesses pay all the taxes due under UK law and we do not settle for less."