Page last updated at 17:41 GMT, Tuesday, 16 February 2010

HMRC raises more tax from wealthy and foreign taxpayers

Rich and foreign taxpayers are being squeezed, the figures suggest.

The amount of extra tax obtained from some wealthy taxpayers has shot up by 360% in the past five years.

Enquiries by a special unit of HM Revenue & Customs (HMRC) gathered an extra £373m in tax in 2008-09, up from just £81m in 2004-05.

The figures were obtained from the tax authorities by the law firm McGrigors, using the Freedom of Information Act.

McGrigors said the Revenue unit had focused on rich taxpayers, including foreigners living in the UK.

"Many of the foreign nationals and wealthy UK individuals are investment bankers and hedge fund managers," Phil Berwick of McGrigors.

"Many have sought to shelter some or all of their earnings from the UK taxman by using tax avoidance schemes," he added.

High Court

Last month the High Court upheld the right of HMRC to seek £100m in income taxes retrospectively from 2,500 users of an offshore tax avoidance scheme based in the Isle of Man.

Typically these were self-employed IT and engineering contractors.

The extra money highlighted by McGrigors was raised by staff of the Revenue's High Net Worth unit, a merger of its previous Expat and Complex Personal Returns teams.

However HMRC has previously revealed that it expects the total number of higher-rate taxpayers to shrink from 3.89 million in 2007-08 to 2.9 million in 2009-10.

The amount of income tax they pay is also predicted to shrink by £15.9bn during that time, from £91bn to £75.1bn.

"HMRC is looking at substantially fewer rich taxpayers, so the amounts it raises from this special unit may be less in the future," Mr Berwick said.


The tax authorities have been putting much more effort in recent years into ensuring that wealthier taxpayers hand over the tax the Revenue expects of them.

Two years ago the National Audit Office praised the Revenue's overall anti-evasion work for raising a total of £9.17bn in extra tax in 2006-07, a vast increase on the £1.13bn raised in 1991-92.

That sum, taken from both corporate and individual taxpayers, did not include any money from the Revenue's recent campaign to flush out cash hidden in offshore bank accounts.

"HMRC has been aggressively targeting tax avoidance schemes used by wealthy taxpayers over the last few years," said Mr Berwick.

"Also, planning structures which were valid when established may no longer be compliant," he warned.

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