What changed
If you are a billionaire with a UK tax footprint, HMRC now wants you on a first name basis with a compliance manager. The tax authority has refreshed its billionaire roster to capture anyone with a UK tax link, not just people filing personal returns, according to a person briefed on the change. It is a notable pivot after a cross party Parliamentary committee concluded last year that HMRC did not have a complete handle on billionaires' financial affairs.
This change aligns with recommendations from the National Audit Office, which last year released a report examining wealthy individuals. The NAO urged HMRC to revisit its definition of the wealthy population and to explore the potential for more granular groupings of wealthy taxpayers.
How HMRC is doing it
"We want to help all customers get their tax right, including the UK's wealthiest people. We've had dedicated customer compliance managers for wealthy individuals for several years, allowing us to identify and address tax risks effectively," an HMRC spokesperson said.
Up to now, HMRC assigned compliance managers to wealthy taxpayers in general without carving out billionaires as a separate group. About 15,000 taxpayers had a customer compliance manager, equal to 2% of the wealthy population. The review determined that roughly half of the UK's 60 highest income taxpayers, as well as individuals in the top 50 for capital gains, lacked an assigned compliance manager, since HMRC made assignments using risk-based criteria rather than wealth alone.
HMRC declined to say how many billionaires with a UK tax footprint have been identified and paired with managers, saying it will set out the figures in a wealthy compliance plan scheduled for later this year.
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The new playbook
To build the list, HMRC pulled from its own data, information already public, and details shared by other countries, according to a second person familiar with the effort. According to the second person, those customer compliance managers will chart individuals' links to businesses, trusts and other vehicles as a component of the effort.
In its report last year, the Public Accounts Committee observed that HMRC was unable to say the number of billionaires who pay tax in the UK, and it pressed the department to better "understand and explain the contribution that the very wealthiest in society make to tax revenue." HMRC told the committee it calculates liabilities based on income and gains and does not have a mandate to gather data on overall wealth.
What this means for your portfolio
Advisers are already seeing the ripple effects. "We are already seeing clients being contacted directly, as well as through their registered agents, with significant requests for information. Unsurprisingly, that is causing some concern," said Charlie Sosna, Mishcon de Reya's head of private wealth and tax. "This looks to be part of a broader move towards greater scrutiny of the affairs of the very wealthy."
For everyday investors, the signal is that tax transparency at the top end is moving up the agenda, which can mean more data gathering and closer looks at complex ownership webs. If policy shifts can sway market tone or deal flow, this is one to keep on your radar.
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