Investigations into wealthy individuals help HMRC recoup £1.9bn

Data obtained by Pinsent Masons has shown that HMRC’s yield from investigations into wealthy individuals rose 58 per cent in 2018-19 from £1.2 billion to £1.9 billion.

The HMRC carried out its investigations based on global data sharing agreements and data leaks such as the Panama Papers, where documents held by an offshore law firm including information on corporate and trust structures were leaked into the public domain.

According to Pinsent Masons, the Panama Papers investigation has brought in £190 million so far, with a further 215 investigations still ongoing.

“HMRC’s data-led approach is proving incredibly effective – the taxman’s reach has never been longer than it is now. HMRC can ask for data on taxpayers from every tax haven and almost every country in the world,” said tax law expert Steven Porter.

Mr Porter explained that the surge in yield from investigations may also reflect HMRC’s multi-faceted approach to compliance among wealthy individuals.

“Data is used to cross-check returns and sometimes letters are simultaneously pumped out asking individuals to confirm information they don’t need to confirm – mistakes can easily be made which can leave taxpayers exposes to investigations,” he noted.

Mr Porter said HMRC’s Connect database, which is able to cross reference up to 22 billion lines of data, was also helping in its efforts to gather information from an increasingly wide range of sources.

“HMRC’s willingness to not only investigate, but also enforce and prosecute, shows its continued use of the stick over the carrot when pursuing wealthy individuals,” Mr Porter added.

The introduction of the Common Reporting Standard (CRS) in the last few years has helped HMRC’s investigations. Over 100 countries have agreed to share financial data and in 2018 HMRC received information about 5.67 million offshore accounts held by around 3 million UK residents.