Accountants of the UK have sent out the memo – if you are a high earner, just pay your taxes. HM Revenues and Customs will be targeting those who are paying the most recently added 50 per cent top rate of income tax, with a special “high net worth unit”. What once involved 5,000 people, now will be 150,000 who will be contacted by the government. The crackdown is all about locating those who are avoiding the necessary of all evils – paying all taxes on time.
From the government’s point of view, this should be a great new way to make money, raking in an estimated seven billion pounds in extra tax revenue.
The master of the tax crackdown is Danny Alexander, chief secretary to the Treasury. He unveiled the scheme last week at the Liberal Democrat party conference.
Ever since the unveiling, accountants have warned that any high earners planning on sidestepping tax payments, will be met with opposition and justice will be served. There are 10 popular schemes to avoid paying taxes, listed on the HMRC website. This number is sure to rise as tax evaders get more and more creative.
Accountants who have routinely tried to find loopholes and other little unique ways to save clients on their tax are now being scrutinized much more often. Other than domestic loopholes, seeking offshore schemes is a convenient way to take advantage of schemes on foreign soil. Many people decide to retire offshore and when they do, a pension scheme called QROPS is often used by high wage earners. They will also be greatly scrutinized by HMRC.
James Hender, of Smith and Williamson, remarked on who had the ultimate responsibility to do the right things, saying: “No tax advisor wants people to do anything other than pay the correct amount – but every individual has a right to organize their affairs in a tax efficient manner if they want to.”