HMRC has ramped up efforts to curb suspected tax avoidance amongst high net worth individuals through its ‘Rising Stars’ team.
The ‘Rising Stars’ team was launched 2012 to investigate the tax affairs of individuals with rapidly rising incomes and a net worth of at least £15m, as well as anyone who has the potential to meet the £20m wealth criteria for the High Net Worth (HNW) Unit within the next five years.
According to Fiona Fernie, Partner and Head of Tax Investigations at Pinsent Masons: “Creating the Rising Stars team means that HMRC has left virtually no part of the million plus market escaping scrutiny.
“HMRC has been clamping down on suspected tax avoidance amongst very wealthy taxpayers for some time and it now has a system in place to monitor those with fast-growing wealth well before they reach necessary threshold for scrutiny by the HNW Unit.”
Young sports stars, celebrities and entrepreneurs are expected to be targets of particular interest. This will mean more intense scrutiny for areas like Esher and Walton, recently revealed as paying the highest amount of income tax in the country, thanks to the high number of sporting and entertainment stars who call it home.
“Units focused on High Net Worths also tend to have a smaller ratio of taxpayers to officers which means resources are more concentrated. Investigations tend to bear more fruit as a result,” said Fernie.
HMRC has upped its game, introducing new technology to its arsenal. Namely the £45m database system ‘Connect’, which gathers real time data to help it pinpoint groups where tax avoidance may be an issue. It draws information from multiple public and private sources, including: banks, local councils and even social media.
“HMRC is now drawing on wider range of information to identify targets for investigation,” said Fernie. “Those with complex tax affairs and offshore wealth are increasingly likely to come under the spotlight as a result.”
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