HMRC’s Tax Squad nets £1.5bn from the rich | Personal Finance | Finance

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A secretive tax unit at HM Revenue & Customs has more than doubled its haul from wealthy individuals in a single year.

The team has raised over £1.5 billion in 2023-24 as part of an aggressive crackdown on the rich.

The Wealthy and Mid-Size Business Compliance (WMBC) team – described by insiders as a “special investigations” squad – was set up to target high earners and those with multimillion-pound assets.

It netted nearly £848 million, even before taking into account a headline-grabbing £652 million settlement with billionaire Bernie Ecclestone, the former boss of Formula One.

The eye-watering total is up from £713 million the previous year, according to figures obtained via a Freedom of Information request by law firm Pinsent Masons.

Tax experts say the surge is no accident – and warn the rich are squarely in HMRC’s crosshairs as the government scrambles to plug holes in the public finances.

“HMRC have been set some very hard targets for extra tax collection by the chancellor. It is hard to see how they can achieve those targets without a sharp rise into tax investigations into the wealthy,” said Ian Robotham, legal director at Pinsent Masons, told the FT.

Wealthy taxpayers — defined as those earning over £200,000 or with assets above £2 million — paid £119 billion in personal taxes last year, making up a staggering 25 per cent of the UK’s entire personal tax receipts. On average, that’s £140,000 per person.

Nimesh Shah, chief executive of accountancy firm Blick Rothenberg, said: “I know from experience over the past five years, that there has been a focus from HMRC on wealthy individuals, as there is a perception and understanding that there is tax risk within the wealthier population.”

The figures come hot on the heels of a National Audit Office report warning that the scale of tax lost to evasion and avoidance by the rich may be far higher than previously believed.

It found that total revenue collected from wealthy individuals rose to £5.2 billion in 2023-24, up from £4 billion the year before.

One reason for the surge is the implementation of a powerful AI-driven data system known as Connect, which cross-references information from bank accounts, credit cards, property records, even travel data – all to sniff out undeclared income or suspicious patterns.

“People do still underestimate the sophisticated data mining that HMRC does,” said Dawn Register, tax dispute partner at BDO.

“Most inquiries are data led, they’re not random. HMRC is often checking for technical errors and the wealthier the individual they find an error for, the more tax yield they’re going to get.”

She said many current investigations are focusing on offshore assets and residency status – areas where the tax rules can be complex and easy to misstep.

Robotham added that HMRC has been quietly boosting its arsenal with AI tools and hiring hundreds of compliance staff, following extra government funding in both the Spring Statement and Autumn Budget.

HMRC said: “It’s our duty to ensure everyone pays the right tax under the law, regardless of wealth or status. The government is delivering the most ambitious ever package to close the tax gap and bring in an extra £7.5bn for public services per year by 2029-30.”