HM Revenue and Customs (HMRC) has intensified its scrutiny of overseas billionaires who hold assets in Britain, dispatching letters to ultra-wealthy individuals.
The tax authority is notifyiing their advisers that dedicated tax compliance managers will be appointed to monitor their affairs.
This move follows a scathing assessment from the Parliamentary Public Accounts Committee (PAC), which last year criticised the tax authority for failing to establish how many billionaires were actually paying tax in the UK.
The PAC said it was “disappointed to find that HMRC cannot use the wide range of data it uses to identify wealthy people to provide transparency about the tax paid by the wealthiest”.
HMRC targets Britain’s billionaires as tax compliance managers to keep tabs on wealthiest
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These compliance managers will examine billionaires’ connections to their business interests, trust arrangements, and broader financial positions, both domestically and internationally, according to The Telegraph.
The correspondence was triggered by HMRC’s recent broadening of what constitutes a billionaire, extending the classification beyond those who personally file UK tax returns to encompass anyone with a British tax footprint.
To identify this wider cohort, the tax authority drew on its own internal records alongside intelligence furnished by foreign Governments.
HMRC already participates in the Common Reporting Standard, an international framework through which countries automatically share financial account data on an annual basis.
Tax receipts, including income tax, CGT and National Insurance, over recent years | HMRC
John Healey is under pressure | PA
Legal practices with expertise in private client and tax matters reported that the letters had sparked a notable surge in enquiries from both longstanding and prospective clients seeking guidance on their UK tax exposure.
Charlie Sosna, who leads private wealth and tax at law firm Mishcon de Reya, jokes that the letters were “requesting all information up to inside trouser leg measurements”.
He cautioned that the process tends to be open-ended: “Clients are wary that once HMRC starts pulling at a thread, they don’t stop.”
Aidan Grant, a partner at Collyer Bristow, shared: “It is more important than ever for wealthy individuals to ensure that they take proactive steps to secure appropriate tax advice in relation to their UK affairs.”
The number of billionaires and millionaires operating in the UK | Henley Wealth Migration Dashboard 2024
Chris Rokos, the hedge fund magnate and philanthropist, earlier this month became the latest prominent figure to leave Britain, driven by fears of a potential tax raid under Prime Minister Andy Burnham.
As the nation’s third-largest individual taxpayer, his departure alone will cost the exchequer an estimated £330million.
A HMRC spokesman said: “We want to help all customers get their tax right, including the UK’s wealthiest people.
“We’ve had dedicated customer compliance managers for wealthy individuals for several years, allowing us to identify and address tax risks effectively.”