HMRC investigates top earners

HM Revenue and Customs (HMRC) is investigating £400 million-worth of tax that has possibly been unpaid by directors and executives, according to analysis by Pinsent Masons.

The law firm has analysed official data from HMRC’s large business service, a department responsible for the taxes paid by the 770 largest organisations in the UK. It found that the £400 million-worth of unpaid taxes, including pay-as-you-earn (PAYE) and national insurance contributions, is 43% higher than the £280 million that was under investigation last year.

According to Pinsent Masons, this could be driven by an upswing in HMRC-compliance activity, as well as investigations into avoidance linked to the 50p tax rate and the temporary special tax on bank bonuses. HMRC investigators have also been given new powers to tackle disguised remuneration.

Jason Collins, partner at Pinsent Masons, said: “HMRC has taken a particular interest in cases where income or an individual’s role at a company has been structured to reduce their tax burden, particularly their PAYE and national insurance contributions.

“The introduction of new taxes for higher earners, such as the 50p marginal tax rate, means HMRC will be on increased alert for any new forms of tax avoidance. The 50p tax brought in less than expected, so this may have set alarm bells ringing for tax investigators.”

Collins added that, although the figure being investigated is £400 million, this is only an estimate, so the amount that will actually be collected by HMRC is likely to be much lower.