| | | | | | | | HMRC's increased focus on targeting wealthy individuals: impact on agricultural businesses
| | In recent years, HM Revenue & Customs (HMRC) has intensified its efforts to ensure that wealthy individuals in the UK are paying their fair share of taxes. This increased focus is part of a broader strategy to reduce the tax gap and ensure compliance among high-income earners and those with significant assets.
Definition of Wealthy Individuals
According to HMRC and corroborated by the National Audit Office, a "Wealthy" individual is defined as someone with an income of £200,000 or more, or assets of £2 million or more, in any of the last three years. As of the 2023–24 tax year, this group includes approximately 850,000 individuals, representing about 2% of UK taxpayers. | | HMRC Wealthy Unit
The HMRC Wealthy Unit, also known as WMBC (Wealthy & Mid-sized Business Compliance), is a specialist team tasked with monitoring high-risk individuals for tax avoidance or evasion. This unit conducts targeted enquiries, often involving offshore structures, trusts, and complex investment vehicles. They use advanced data analytics and third-party data (e.g., CRS, Trust Register, CARF) to identify discrepancies. | | | | HMRC are taking several steps to enhance its compliance efforts, with some of the key areas listed below: - Recruitment: HMRC is recruiting 500 new compliance officers from April 2025 to reduce the tax gap
- Investment in Offshore Tax Compliance: HMRC is investing in offshore tax compliance, with 400 additional staff over five years expected to yield over £500 million by 2030
- Debt Collection: HMRC is expanding debt collection through third-party agencies, targeting £44.3 billion in unpaid tax
Impact on Rural Farms and Estates
The increased focus by HMRC on wealthy individuals has significant implications for farms and estates. Our experience with clients regarding HMRC enquiries has highlighted several key areas of focus: - Diversified Businesses: HMRC's central technical team oversees extensive information gathering to deny loss relief and restrict the ability to relieve current year losses against other income in the year. This scrutiny can impact diversified rural businesses, such as those combining farming with other activities like event hosting or storage services
- Key Areas of Attack: HMRC scrutinises whether the business is trading or investment, trading with a view to profit, the activity level of individuals in the business, and whether there are separate trades. For rural estates, this means careful examination of whether activities like farming and other ventures are considered separate trades or part of a single business
| | | | | | | | James Cowper Kreston is a leading firm of accountants and business advisers, with offices across the South of England. We deliver focused, innovative advice to a diverse range of businesses and individuals helping our clients to maximise their potential.
If you would like to discuss this topic further, then please contact a member of our Farms & Estates here at James Cowper Kreston.
Kind regards Sharon Omer-Kaye | Partner T: +44 (0)7469 725716 E: somer-kaye@jamescowper.co.uk jamescowperkreston.co.uk | | | | | | | | | | | | | | | | | | | | | | | |
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