It's that time of the year again when the annual tax return deadline becomes the main focus for us advisers (and many) of taxpayers or 'customers' as HMRC labels them.
For the large majority of taxpayers, their annual tax compliance, although sometimes daunting to the untrained or unfamiliar, can be relatively straightforward to manage.
Having a suitably experienced professional in your corner can take the stress away of knowing what to put where or determining what is taxable or allowable.
Some taxpayers do an excellent job of managing their tax affairs independently or with very little assistance.
However, for a particular group, the need for an adviser becomes almost inevitable, if not an absolute requirement.
These individuals are referred to by HMRC as 'wealthy individuals and have their personal tax compliance looked after by a designated individual in a specialist HMRC unit.
The aptly named 'Wealthy Team' sits in the Customer Compliance Group.
To be classed as a wealthy individual in the eyes of HMRC, there are a couple of entry levels to gain access to.
HMRC defines "wealthy individuals" as those who have had income in excess of £200,000 or assets equal to or above £ 2 million in the last three years.
It is estimated that there are approximately 800,000 wealthy customers.
HMRC have determined that wealthy individuals present a higher risk of error than other customers as the amounts involved are greater. Because they have the opportunity to invest in more than one country, their tax affairs are much more complex.
A Customer Compliance Manager (CCM) is assigned to a taxpayer dealt with by this unit, with the task of developing an in-depth understanding of the individual's finances and behaviour.
They review the tax returns alongside the intelligence HMRC has gathered from the UK and overseas sources.
Individuals dealt with here are more likely to receive a Compliance Check on their tax return, with some individuals having multiple years under investigation simultaneously.
HMRC has access to vast amounts of data and intelligence, more so than ever before. So, does it give HMRC the advantage and are we on a level playing field?
The answer depends on several factors, so only sometimes. It pays to have the right person in your corner, as with most things.
Who best to challenge HMRC and defend your or your client's corner than a fully qualified tax adviser who has experience in preparing complex tax returns and has dealt with HMRC's wealthy team and CCMs regularly?
How to approach such tax returns is always a matter of risk. Most accountants we come across have clients that are deemed 'wealthy', but only a few have the confidence to go up against an experienced CCM. Or they don't have the relevant experience required for completing complex tax returns.
Taxpayers submitted more than 12 million tax returns for the 2020/21 tax year.
The wealthy team is dealing with less than 10% of the population.
HMRC activity in checking tax compliance is on the increase.
With penalties for inaccurate returns being as high as 100% (or 200% if there is offshore non-compliance) of the potential lost revenue, advisers and clients must be represented in the best possible way.
HMRC is gearing itself up to wage war and is under political pressure to increase tax yield and close the tax gap.
31 January is very close, and the pressure to get returns done can sometimes lead to inaccurate submissions.
ETC Tax has a highly professional tax compliance team, with experience in dealing with wealthy individuals and HMRC's wealthy team, both in terms of return preparation and dealing with compliance checks.
If you need any help with a Self Assessment or in relation to any other tax matters then please get in touch.
