The Affluent Unit examines the tax affairs of approximately 300,000 people with an annual income of more than £150,000 and net worth of more than £1 million. Since 2012/13 the Affluent Unit’s headcount has increased by 54%. The High Net Worth Unit deals with the tax affairs of HMRC’s wealthiest individual taxpayers, with a net worth of more than £10 million. Both the Affluence Unit and the High Net Worth Unit match the tax declarations made by wealthy taxpayers against different databases, public records and third party information to identify any inconsistencies. HMRC is using its own information powers as well as liaising with overseas Revenue Authorities to obtain offshore asset information under Exchange of Information powers to assist in its risk profiling. Common characteristics of wealthy taxpayers who have been targeted for investigation are those who:
- habitually use avoidance schemes;
- have a low effective rate of Ttax across their total income;
- have bank accounts in Switzerland who appear to be understating their tax liability;
- fail to file their self-assessment return on time;
- avoid or evade Stamp Duty on property purchases; and
- have UK and offshore property portfolios.
For example, a recent Affluent Unit investigation involved a wealthy individual who was found to owe more than £100,000 tax having failed to declare rental income received in respect of ten overseas holiday homes.
Any investigation by either the Affluent Unit or the High Net Worth Unit should not be underestimated and you should immediately seek specialist representation.