The UK’s tax authority, HMRC, has observed a significant increase in tax evasion and avoidance by wealthy individuals, with figures rising from £1.9bn ($2.5bn) to £2.1bn over the last year, according to UK accountancy group UHY Hacker Young.
UHY Hacker Young has reported a concerning trend of growing tax evasion and avoidance among affluent taxpayers in the UK.
The national accountancy group’s data indicates that the amount of underpaid tax by this demographic has surged by an average of 17% annually over the past three years.
UHY Hacker Young partner Neela Chauhan stated: “These numbers tell you where we can expect HMRC to launch its crackdown – against wealthy people, where unpaid tax is rising and against small businesses where the tax gap has jumped to £28bn from £25.9bn.”
The UK Chancellor, Rachel Reeves, has allocated “substantial new resources” to HMRC to intensify tax investigations, Chauhan further noted.
According to Chauhan, this is likely to result in “unannounced visits by the taxman and more aggressive mailshots from HMRC to individuals it suspects of underpaying tax.”
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By GlobalDataThere is a persistent issue of underreporting income and capital gains by wealthy individuals.
This ranges from undeclared income from buy-to-let properties to funds concealed in offshore accounts or trusts. With the latter becoming more detectable, there has been a rise in the use of cryptocurrency exchanges and wallets to hide assets from HMRC.
Chauhan added: “There are plenty of ways for the wealthy to legally reduce their tax bill. Pensions delivered £29bn in tax benefits in the last year and ISAs £9.4bn, and EIS and VCT schemes are aimed mainly at the wealthy. Sensible tax planning can also reduce IHT bills that would otherwise be fairly damaging to family wealth.”
HMRC is taking a firm stance against tax evasion by the wealthy.
Chauhan warned: “HMRC takes any action by wealthy taxpayers to evade tax very seriously. They could be subject to substantial fines or even face prosecution. HMRC will pursue custodial sentences if the evasion is particularly egregious.”
