HMRC extends Affluent Unit remit

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An expansion of a HMRC team targeting tax evasion by wealthy people has been broadly welcomed, but some experts fear the crackdown on tax dodgers is muddled and not radical enough.

Douglas Alexander, the chief secretary to the Treasury, said earlier this week that an extra 100 inspectors and specialists will be recruited to scrutinise the tax affairs of the 500,000 wealthiest people in the country.

HMRC’s “Affluent Unit”, set up in October 2011, will target people worth £1m, instead of the current threshold of £2.5m.

Another part of HMRC, called the “High Net Worth Unit”, focuses on the UK’s richest people with assets of more than £20m. The unit has collected £500m in extra tax since its creation in 2009, exceeding expectations, HMRC said.

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About Nick Huber

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I’m a specialist business journalist and have a particular interest in tax and technology. 


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28th Sep 2012 11:33

High net worth

Individual or joint net worth of £1M?

Presumably value is net of borrowings?

Does this mean that these individuals get the equivalent of a proper tax office?

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to Valbona
28th Sep 2012 14:56

@leon0001. er, it does say, "net worth"

That said, if you saw Panorama this week it illustrated an example of some obviously wealthy individuals who had got that way, it seemed, by scamming state schools on leasing IT/Tech equipment (well OK, half way decent local management, or, what we used to have, LEA oversight, would not have fallen for it but that's another argument).

These appeared to be serial scammers who set up and closed businesses thus staying ahead of their creditors and the tax man in the way that our idiotic system allows, no, encourages. However, doubtless on the advice of some accountant, they had had their previous firms make large loans to them. This is a sort of Jimmy Carr K2 arrangement, except that they didn't particularly care about being exposed on national TV. Of course these loans were likely used for consumption (even if dressed up somehow as investment) but handily still reduce the net worth of the individuals concerned.

Unsurprisingly all of the directors involved seem to have multiple and substantial property investments - which as we know go more or less untaxed.

What we need is a proper land value tax. Henry George - Progress and Poverty. Mason Gaffney - Corruption of Economics.

Steve Keen's "Debunking Economics", I especially like his "other jubilee".



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to cagasee
28th Sep 2012 16:32

par for the course

androo235 wrote:

These appeared to be serial scammers who set up and closed businesses thus staying ahead of their creditors and the tax man in the way that our idiotic system allows, no, encourages. However, doubtless on the advice of some accountant, they had had their previous firms make large loans to them. This is a sort of Jimmy Carr K2 arrangement, except that they didn't particularly care about being exposed on national TV. Of course these loans were likely used for consumption (even if dressed up somehow as investment) but handily still reduce the net worth of the individuals concerned.

Unsurprisingly all of the directors involved seem to have multiple and substantial property investments - which as we know go more or less untaxed.

Throughout my career I have watched HMRC pick the wrong cases for enquiry. While as you say serial scammers are seen get away with it time and time again.

HMRC will pursue a lost cause but not a dead cert.

The trouble is the official receiver is just another useless government department.

They should really collect the unlawful dividends and or directors loan account but never do...there are also lots of penalties in the companies act  that would slow them down a bit / stop them but these are never used either.

It's not as if the rules are not there it's the governments will that is lacking.

You don't even have to look like it was done properly.....basically you form a company for £18 register with HMRC trade for two years don't file accounts or annual returns, don't pay PAYE, NIC , VAT, CORPORATION TAX companies house will strike you off HMRC will not pursue. Form a new company and do it again.

Personal tax returns are dealt with by salary and dividends entry to keep HMRC happy and can be completely fake.

Just about every scammer in the country knows how to do this as the trick has spread like wildfire....might be illegal but It don't even need an accountancy bill and if you avoid the accountant entirely you wont be reported either.

I suppose at least they have at last noticed that some people that don't pay tax can afford million pound houses. Might even be why? Those of us that do pay our taxes are kept in poverty.


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to cagasee
02nd Oct 2012 14:19

Net worth - for what it's worth.

I know that HMRC have said "net worth" and we know what it actually means. My fear is that it may be misinterpreted, whereby liabilities are ignored to get more people in the net.

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28th Sep 2012 11:56

Return to Olden Times

Makes it almost worth having a million in the bank so that you get proper individual attention from HMRC staff

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28th Sep 2012 12:08

all down to definitions..

£1m in liquid assets or those who have pokey 2 bed flats in central london with no parking?


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By dwgw
28th Sep 2012 12:15

Douglas Alexander?

The Shadow Foreign Secretary?  Shouldn't it be Danny Alexander?

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28th Sep 2012 12:35

In the previous clampdown announced by Danny Alexander at a Lib Dem conference a year or so ago, HMRC did not actually recruit any new staff at all, specialised or otherwise.  They merely shifted the deck chairs on the good ship HMRC, probably pulling people away from other necessary and vital work.  It may be the same exercise is happening again.  HMRC workloads and targets set by ministers trying to curry favour with their members at annual political conferences.

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28th Sep 2012 12:40

Will HMRC take any notice

I think whatever you tell HMRC they will argue with you and do the opposite out of sheer awkwardness.

It's just the way they work!

It is complete madness they cannot divert resources to the most profitable part of their organisation at a time when the money is needed.

One can only Guess that various elements are playing politics with the whole situation. Perhaps the current financial difficulties have been over egged for political reasons? Otherwise you would fix it wouldn't you?


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By dwgw
28th Sep 2012 12:42

They're good at that!

Moving staff sideways and calling it increased resources - isn't that also what's apparently happening following the health service "reforms"?

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28th Sep 2012 20:22

@dominovision Pokey 2 Bed Flats.

Owner occupiers of "pokey 2 bed flats" in (Central) London are quite likely to have acquired these on PAYE salaries so will have little to fear. And, at least as the system is now, even if the owners of said flat are a pair of state pensioners with no other income then they have little to fear too.

So, I suppose what I'm saying is, "and your point is?".


What we need is a proper land value tax. Henry George - Progress and Poverty. Mason Gaffney - Corruption of Economics.

Steve Keen's "Debunking Economics", I especially like his "other jubilee".

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By camcca
28th Sep 2012 16:51

Governmemt spin

Shouldn't they set up an "Effluent Unit" to deal with all the spin emanating from the Treasury?

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28th Sep 2012 20:35

@the black knight

I did say that companies are ephemeral, virtual persons and that individuals are mobile, also, as I'm sure you've read me say before, the current system has huge definitional problems ( Tolleys, is it really 17,000 pages + now). And, such people, as well as being mobile and their legal vehicles ephemeral can also pay good lawyers to slooooooooooow things down and obfuscate.

and then there's offshore......

But you're right expand HMRC to, I don't know, 100,000 staff, increase HMRC lawyers salaries to match city lawyers salaries. They will still go after the low hanging fruit first - I would, wouldn't you?


What we need is a proper land value tax. Henry George - Progress and Poverty. Mason Gaffney - Corruption of Economics.

Steve Keen's "Debunking Economics", I especially like his "other jubilee".


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to Kent accountant
01st Oct 2012 10:07

No what we need is....

androo235 wrote:

What we need is a proper land value tax. Henry George - Progress and Poverty. Mason Gaffney - Corruption of Economics.

No what we need is less change and more enforcement.

Trouble is HMRC are not collecting any fruit. Low hanging or otherwise.

Companies are a persona at law.....a long established legal principle.

Tolley's are a publisher that publish many books and not the only ones that reprint the primary and secondary legislation which is where I believe the popular quote 17000 pages line comes from. Never counted them myself.

If HMRC was more interested in carrying out its primary function rather than getting excited about broadband and other technical IT changes RTI driven by a need to pay benefits, then perhaps we would not be in this mess.

The rate of change and the sheer number of obvious cock[***] ups is just an indicator that we are being led by a bunch of Psychopaths...chose character type is ideal for change, cock[***] up, change, cock[***] up politics. The loonies have indeed taken over the asylum! Politicians and senior management should need to show via brain scan that their frontal lobes are working before taking the position. Otherwise the only way we can tell the difference between the Psychopath and a genuine high flyer is the trail of destruction the former leaves behind them.


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By Exector
01st Oct 2012 10:21


Its true, most of the bullshit that comes out of the higher echelons of HMRC and the Treasury about increased resources actually turns out to be, surprise surprise, just re-designation of existing staff or re-directing funds already paid over. However, the HMRC website has a feature not seen for some time- an advert for recruitment of 100 presumably old FT type, Inspectors. Sounds encouraging? Yeh but, no but-- 4 years training in reality before they can even begin to contemplate tackling the more complex higher end cases one presumes they were recruited for and probably double that to get the skills and common sense nous to deal with them most effectively. Good job then they didn't get rid of literally hundreds of fully trained and long experienced Inspectors a couple of years back, at rather great expense for the early retirement guys, as that would have been really stupid and short term wouldn't it  and we know our politicians and politicised senior civil-servant appointees are neither of those things are they?

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01st Oct 2012 13:55

I'm not saying there is a problem with the company

I don't mean to imply, by pointing out the ephemeral and virtual legal personality of the company, that I have a problem with limited liability etc per-se. Just that it would be a lot simpler to collect an LVT from companies than playing cat and mouse with them over what their earnings may or may not be now, in the future or, more likely, were, some years ago. Similarly with individuals. I am not against retaining an income tax for very high earnings at a flat rate though some LVT supporters are as they believe in the single-tax idea. I am not so dogmatic. However, I do sympathise with the idea that if LVT can raise enough to run public services then why have other taxes. That said of course sin taxes would be kept as the electorate and science or the great and good, demand, advise or decree. Incidentally, collecting LVT annually, in advance, will help flush out the Enron's of this world quicker too (and other scammers as discussed).

You may be right that HMRC management is incompetent, but if they are then so is every other tax jurisdiction in the world too. Actually as tax collectors go, comparing globally, I would think that our lot do ok. What all countries tax collectors have in common is trying to operate an ever more complex tax system which the [il]-logic of the ruling economic paradigm (neo-classical economics, the NCE) requires.

Of course I know that Tolleys are a publisher, I will admit that I've never actually seen a Tolleys (not something I would seek out unless I had to - though I realise a familiarity with it is the basis of many a good livelihood.....) however I understood that it was a practitioners guide rather than a reprinting of the legislation. If, as you imply, the primary legislation itself amounts to 17,000 pages then, well, need I say more!

Of course moving from a world which taxes work, and therefore economic activity, to one that taxes unearned income, rents, would take a few years to achieve. What are unearned incomes, well principally land rents, though also things like the airwaves. Taxing the latter, in effect at 100% via auctions where companies bid the present value (I assume it's only accountants reading here, others will have to look up present value if you're not sure what it means) of what they estimate access to the resource to be worth to them, is already less controversial. I expect that mobile phone companies, who presently get to pay tax at least three times, for the license via the auctions, on their profits, and on their payrolls might welcome an LVT. Moreover, if there were no payroll or corporation taxes they would bid more for the airwaves license, so the simpler LVT system will raise as much, or maybe more, resource for the public funds as the present NCE mandated system. Why, because LVT is economically more efficient. LVT on actual land rents at 100% has the same logic. 

Henry George - Progress and Poverty, Mason Gaffney, The Corruption of Economics.

Steve Keen's Debunking Economics.

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02nd Oct 2012 22:07

which of you is right?

Here we have leon001 saying that HMRC will overtax some individuals by "misinterpreting" the meaning of net worth. In effect this represents the view that says that the Tax Man is a tyrant and has no business confiscating the wealth of defenceless hard-working people. Many others have Leon's view. I sympathise with this view, for ordinary people the tax man is an unaccountable oppressor.

Then we have Black Knight and, also, many others who say the opposite, that HMRC is inefficient and doesn't use the powers it has effectively. That too many people don't pay their fair share as a result of this. I sympathise with this view. For the already wealthy, the resourceful and avaricious, the dishonest and the mean spirited the tax-man is too easily fooled, circumvented or outrun.

The tax system is simply too complex and shows no sign, under the NCE, of ever getting any simpler. Why? Because the NCE requires this complexity in order to try to be fair (democratic society does demand that the tax system at least tries to be more or less fair) , it fails miserably, all the time and everywhere.

Henry George - Progress and Poverty. Shaxon's Treasure Islands. Mason Gaffney - Corruption of Economics. Steve Keen - Debunking Economics - too name but a few who should be much better known than they are.

Here's three who get much too much publicity, Keynes, Hayak and Marx (the recent BBC Masters of Money testifies to this).

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to themowgli
03rd Oct 2012 11:10

I never said tyrant.

I never intended to imply anything about improper motives or overtaxing. My worry is the additional unnecessary worry and compliance costs incurred by individuals who ought not have been selected for "investigation", "intervention" or, in current terminology, "checking". One can only hope that the HMRC people dealing with this are properly trained and experienced. As far as I can tell, the pool of suitably qualified personnel is rapidly diminishing. Career paths for HMRC personnel are now such that nobody is now able to acquire the relevant experience through a real tax district. 

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03rd Oct 2012 08:13

Targetting resources

Going back to the original issue there must be many people - at least in southern England - over, say, age 50, who are "worth" more than £1m but that £1m has been accumulated through PAYE work paying off a mortgage on a property that has risen substantially in value (and which they may recently have downsized from to have funds for retirement) and from inheritance - this being perhaps the first generation when a very significant number of people have parents who owned, rather than rented, property.

I cannot see what merit there is in even asking these people questions about their returns when we all know there are plenty of people out there who are happy to keep HMRC in ignorance of their activities. 

Hitting people worth more than £1m may sound attractive as a vote winner but in terms of increasing tax take compared to a really serious tackle of the black economy it's a total waste of resources. 

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03rd Oct 2012 10:29

Sound bite policies...

Pandering to the current fashion for targeting the 'wealthy', as usual the people at the top have no clue where they should really target their resources, which is at the grass roots level.

Here's an idea.  Grab Land Registry records and find out who owns houses.  Get every mortgage company to tell who has a mortgage, and the monthly payments on it.  Compare.  Now check your tax system and see how many people aren't on it that are managing to pay a mortgage.  Investigate.  Every mortgage holder by law forced to supply their NI number, false number and your property is seized and sold off.

Bet the above would pull in more of the black economy than any other scheme they could come up with.

As for those advocating a 'land tax' or a 'property value tax' consider that many of the houses worth over £1m are actually owned by university employees, teachers, nurses, etc who have inherited them or have lived in them for many years, and 1% of the value could equate to 50% of their earnings!  Not to mention pensioners, etc.

High time we stop focusing on trying to rob the 'wealthy' and concentrate resources on ensuring everyone pays a FAIR share (or pays at least something).

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03rd Oct 2012 11:28


The tax system is more than just a method of collecting tax for wasted expenditure.

It also influences behaviour, and encourages investment and entrepreneurs.

There are some bloody stupid bits (complicated bicycle schemes etc) put in for political reasons because there was nothing better to say on budget day.

Over simplification will result in unfairness and a lack of flexibility that the real world economy needs.....A rigid unflexible tax system will restrict the economy and result in every one producing the same item in the same way, investment, improvement and growth will all be restricted. What will be fair to one group will be unfair to another.

In my opinion those that want to rip up the law and tax book and start again probably don't understand what we already have.

The answers to the current issues facing this country are quite simple....Lower taxation rates to stimulate investment and growth......a proper enforcement of tax law to make them real ...less government regulation and waste....small business is buried in form filling for no real practical use other than to keep a jobsworth health and safety inspector happy.

This could be done now...but clearly there is no political will to do so. This is standard human/ business behaviour though, borrowing will continue for no reason other than "we've run out of money" where as there is nothing wrong in borrowing so so long as you have a plan you are investing in.


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03rd Oct 2012 11:49

P.S. HMRC already have access to

HMRC already have access to mortgage payments details on screen because they use them as a security check question for tax credits....why more intelligence led policing is not used is a complete mystery to me.

they could also use 1, Money laundering reports , 2, read the accounts  3, Drive round and take photos of building work being done. etc etc etc

The way to shake the tree would be with more use of Cop9 letters. Either they declare they are innocent or make a confession....simples.

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By Tromdo
to ireallyshouldknowthisbut
10th Oct 2012 12:44


And if HMRC did this, there would be screams from the profession about fishing expeditions. You can't have it both ways.

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03rd Oct 2012 12:09

@ the black knight. LVT will be just and simpler....

I agree with your first three statements.

I disagree with your fourth paragraph and would point you to my usual references (I will at the end).

Fifth paragraph. Nobody understands the current tax system, nor can they. It is a charter for accountants and lawyers to rack up fees. Actually, aside from the avoiders and evaders themselves accountants and lawyers are the main beneficiaries of the current system.

I would also counter, to those who do not wish to rip up the rule book and start again, although I would put it less dramatically and simply say change direction from taxing earned income towards taxing rents, that they haven't taken the time to and so don't understand the alternatives being put forward, particularly LVT.

The rest of your post is just a rant.

I point you to reasoned arguments that disagree with you. I think LVT would be just and simpler.

Henry George - Progress and Poverty. Shaxon - Treasure Islands. Steve Keen - Debunking Economics, Mason Gaffney, The Corruption of Economics. and


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03rd Oct 2012 12:38

LVT @ Androo

Sorry but until some political party puts this in their manifesto then it is all pie in the sky and highly theoretical.

We have to deal with the real world.

I am sorry you feel animosity towards accountants and lawyers but we actually do far more than your limited understanding of our subject.

All these great ideas have merit until the practicalities are looked at usually after implementation.

The Rant if that's what you will call it has empirical support just look at H.K and Texas ...lower taxation....lower government.....growth...and a much higher standard of living.

In any case you are preaching to the wrong audience we have no influence over government and do not make the rules, merely interpret them for those that cannot. I expect that situation will still exist no matter how simple the rules fact the more simple the more confusion will result!


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08th Oct 2012 21:57

I doubt income tax was ever in anyone's manifesto....

however, there are stirrings with regards to LVT. . On top of which the Lib Dems have Alter, there are some Tory supporters (Nick Boles) and there is a labour group (headed by Dave Wechsel - I believe Andy Burnham is a supporter and this is at least suggestive). It is Green Party policy, Caroline Lucas is introducing the stalking horse private members bill linked to above. Some significant commentators support it; Martin Woolf - Financial Times Chief Economics Commentator, many (I was assured in an email)  Senior Economist magazine journalists, Guardian columnist Polly Toynbee and other broadsheet writers and bloggers too.

It's true that it hasn't yet reached the red tops (although as I don't read them I wouldn't know - so I  would be happy for someone to contradict me there) and that most people simply don't understand LVT and have a knee-jerk negative response to the idea. One of it's problems is the name itself, alternatives have been suggested, "Location Value Charge" for example, but LVT seems to stick. But you can see that it has surprising appeal across the political spectrum to those who look into it a little more.

Your second line is a clichéd response.

I don't feel animosity to accountants or lawyers and I agree that it's hard to envisage liberty in any well ordered world without both professions. However, they seem to have got out of hand and our economic and tax system is behind the growth in their influence over everyday economic life and hence their numbers and importance.

Your fourth line is surely not an argument for, or justification of, the current system? Is it?

Hong Kong is one of the few countries in the world where a land value tax is a significant element of public revenue. Try this as regards Texas, . I didn't choose these examples, you did.

Finally I think an accountants website an excellent forum for a debate about this subject.

Henry George - Progress and Poverty. Michael Hudson, Fred Harrison who has many accessible and short videos on youtube).

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