The High Net Worth Unit (HNWU) was set up in 2009 to review the personal tax affairs of the 5,000 wealthiest people in the UK, each with a total wealth of at least £20m.
The HNWU has brought in over £500m in extra tax (over and above amounts declared on tax returns) since it was set up. In 2011/12 the tax collected was £200m, up from £162m in 2010/11.
The HNWU comprises around 380 staff working in a number of locations across the UK.
Initially the Affluent Unit (AU) was charged with reviewing the tax affairs of the UK's top one percent of wealthy individuals, who each have wealth of at least £2.5m and/or income of more than £150,000.
The unit was expanded to deal with taxpayers with a net worth of £1m instead of the previous £2.5m. This significantly widened the number of taxpayers to be reviewed by this unit. The AU now covers taxpayers with income over £150,000 or wealth between £1m and £20m.
By the end of December 2012 the AU had brought in an extra £75m in tax with a target of £586m by the end of 2015.
The AU comprises around 200 staff based in a number of locations across the UK.
The OCU is coordinating HMRC’s crackdown on offshore tax evasion. The OCU comprises around 100 offshore tax investigators and their responsibility includes the UK Switzerland Tax Agreement that entered into force on 1 January 2013. HMRC states that the OCU "will look to fully exploit the increasing amount of offshore information at HMRC's disposal, including bank account data."
HMRC’s “Connect” system contains more than a billion records including taxpayer records as well as information from the internet, other government departments, within the private sector and information from other countries.
HMRC highlights that the system holds data including income, interest from bank accounts, ownership of businesses and data from tax authorities in other countries. The system uses analytics to identify connections that show true levels of income and spending that can reveal those evading their taxes.
The current environment means the likelihood of an enquiry from HMRC is high. For high net wealth individuals (HNWIs) and their advisors, the key focus should be on being prepared. By undertaking reviews of their tax affairs at an early stage, in addition to substantially minimising future compliance costs, HNWIs can gain a sense of certainty and peace of mind that a strategy is in place should HMRC choose to enquire at a later date.
KPMG is able to provide an objective opinion on whether a client’s tax affairs would be robust if HMRC challenged the position. Where a review is undertaken, if HMRC were then to ask additional questions we should be able to help achieve early resolution of the issues as much of the work will already have been undertaken. If you engage our review services from an early stage, we can help you to maximise readiness in the event of an enquiry.
For those who have already had an enquiry opened or who have received a letter from HMRC about overseas assets, our team is on hand to assist. Our focus is on ensuring that any HMRC intervention is handled efficiently and effectively. KPMG was recently instructed to act in a long running investigation which the client’s existing tax advisors were unable to resolve, where the client was incurring substantial fees over a period of approximately three years. Our private client team and tax investigation specialists were able to offer a multi-disciplinary approach, using a combination of thorough understanding of the tax legislation and engagement management, giving HMRC the necessary assurance at each stage that all risks had been cleared. The final settlement was ultimately less than the amount HMRC had originally claimed was due and settlement was achieved within four months.
For more information please speak to your local KPMG Private Client Advisor or contact Greg Limb