The taxman’s newly formed “Affluence team” has announced its first major project: targeting wealthy Brits who own land and property abroad. It is rumoured that HMRC are saying they suspect about 350,000 UK tax residents, with earnings over £150,000 a year, have income from properties abroad which they have not declared on their tax returns.
The Offshore Property Project will be carried out by a new 200 strong team of tax investigators and deep technical specialists working in the Affluence Team; which itself was only created on 18th September this year. The new “Affluence Team”: was set up to tackle tax avoidance and tax evasion by those high earners (i.e. people whose personal wealth is more than £2.5m) who are not quite wealthy enough to be dealt with by HMRC’s High Net Worth Unit: which deals with the tax affairs of the so-called HiNWIs – about 5,000 UK tax resident individuals worth more than £20m.
The Offshore Property Project team will bring together specialists from various parts of HM Revenue and Customs. They will also be using cutting-edge computer technology. HMRC has invested heavily in sophisticated data-mining software. These web robots, or spiders, can trawl through publicly available information, and the huge volumes of information already sent in to HMRC, and link that back to the taxpayer’s own electronic account with the taxman. The computer will then interrogate, compare and cross reference the data. This will enable the taxman to identify British taxpayers who own land abroad. At same time new and innovative risk assessments techniques will automatically check to see whether the properties appear to be legitimately affordable (i.e. from declared income), and whether any rents are being declared. Recent property disposals will also be checked against returns (or non-returns) of capital gains.
This new team is part of the government investment of £917m announced in the last Spending Review, aimed at reducing the so-called “tax gap”; over the next four years. Announcing this new unit the Chancellor of the Exchequer said: “With HMRC’s increased capability and expertise…there is no hiding place for tax cheats.”
The Offshore Property Project will apparently soon be followed by further projects, e.g. targeting commodity traders and people with offshore bank accounts.
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