There has been a 29% increase in extra tax collected by HMRC through probes into high net worth individuals by the tax authority’s wealthy and mid-sized business directorate, with the use of accelerated payments notices (APNs) forcing upfront payments before the full court process has been completed.

The amount of extra tax collected by HMRC through investigations into high net worths and other wealthy individuals jumped 29% to £1.2bn last year, up from £919m in 2016/17, says UHY Hacker Young, the national accountancy group.

HMRC has been ramping up its investigations into this top earners following a 2017 Public Accounts Committee report which found that HMRC’s crackdown on this taxpayer group was not as successful as it could have been.

The report concluded that HMRC could collect more tax from high net worths if it was tougher in its approach. In the report, MPs called on HMRC to conduct more investigations, ramp up the penalty environment to act as a deterrent and to focus on the highest earners, with professional footballers  singled out by MPs as a potential target.

Andrew Snowdon, partner and head of tax at UHY Hacker Young, said: ‘HMRC sees high net worths as a segment of the market that it can target in a more persistent and aggressive manner than other categories.

‘Given that there is little public sympathy for tax avoidance among the wealthy, HMRC knows that its tough approach towards this group of taxpayers is unlikely to be reined in.

‘HMRC is using every tool in its toolbox, including controversial APNs which allow it to collect large amounts of disputed tax before an investigation is concluded or a tribunal has agreed that HMRC can take the tax. APNs are heavy-handed but very lucrative for HMRC.’

Under the APN rules, taxpayers have 90 days after receiving such a notice from HMRC to pay the disputed amount and cannot appeal.

The other big change hitting this segment of the tax paying populace is the introduction of the common reporting standard and greater levels of disclosure between international tax authorities, all part of global efforts to curb tax evasion. However, there are concerns that the widening of powers is giving HMRC unparalleled access to banking and financial information with little protection for individual taxpayers.

‘Data on taxpayers’ offshore bank accounts is now being fed through to HMRC from tax havens as part of a global transparency drive and HMRC can use this data for its investigations into high net worths. HMRC will receive data from another wave of countries later this year.

‘HMRC’s hunger for more data on taxpayers is reflected in its latest proposals which would allow it to collect data from any business or organisation without any oversight – an alarming prospect.

‘Although HMRC’s aim to maximise revenues is important, it needs to be careful. Ultra-high net worths are extremely mobile and too tough a tax regime may impact the UK’s attractiveness, which could be damaging both to the economy and tax revenues.’

Report by Sara White