HM Revenue and Customs (HMRC) are to target people worth £2.5m and £20m owning homes abroad under suspicions of tax dodging.
Funded by the Government with £900m to crack down on tax fraud in the UK, HMRC have set up new specialist task forces in the hopes of recovering £7bn lost tax per year in the next three years.
HMRC’s ‘affluent’ unit that will be investigating some of Britain’s wealthiest with homes abroad was set up in September this year and will look into 200,000 odd Brits in the highest tax bracket of 50%.
Commenting on HMRC’s investigations in wealthy tax-dodgers with homes abroad, a spokesman for HMRC said that there is evidence of some UK residents with homes overseas that have not been paying there taxes:
“There is a small tranche who will not be declaring rental income, or who will not be able to explain how they got the money to buy the property in the first place.”
HMRC have recently undertaken initiatives to tackle UK residents hiding taxable income in offshore bank accounts. With the most recent being the signing of a new tax deal between UK and Swiss governments.
This is not the first time that the Revenue has targeted some of Britain’s most affluent residents.
A few years back HMRC set up a specialist unit to investigate tax affairs of around 5,000 of the UK’s “high net worth” individuals with wealth totalling more than £20m.
In the 2009-2010 tax year HMRC took £85m from the UK’s group of “high net worth” individuals and are hoping to squeeze £151m from them for the 2010-2011 tax year.
HMRC’s ‘affluent’ unit will be searching for advertisements placed by homeowners abroad on the internet and in magazines, renting out their holiday homes or leased office spaces that have not been declared.
Holiday homes are thought by the taxman of being an easy way for wealthy Brits to hide a second income from the Revenue.
Individuals receiving undeclared rent off land that is leased overseas to local companies will also come under scrutiny by HMRC.
The Exchequer Secretary to the Treasury, David Guake, said:
“The message is clear: there is no hiding place for tax cheats. The Government is committed to tackling tax evasion.”
Eric Pickles, the Local Government Secretary, has also hit second home owners with the confirmation of plans that could scrap council tax discount for people with second homes.
Last year the discount on second homes in England and Wales averaged a mighty £45m.
Kevin Kinsella Jnr, of KinsellaTax, said:
“I would urge those with second homes abroad, who have not yet been targeted by HMRC, to make sure that their tax affairs are in order.”
“Mistakes can happen and not everyone deliberately evades their taxes. If you receive that dreaded tax enquiry letter on your doorstep, make sure you contact KinsellaTax who will deal with your tax investigation on your behalf, without the need in most cases to be interviewed by HMRC.”
Do you own a home abroad and own a net worth between £2.5m – £20m?
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