Out-Law Guide 2 min. read

Tax investigations: HMRC's high risk wealthy programme

Wealthy individuals in dispute over how much UK tax they owe may find their matter being handled by HM Revenue & Customs (HMRC) in accordance with its 'high risk wealthy programme' (HRWP). This is designed to accelerate tax disputes in the most complex high value cases.

The HRWP was launched in spring 2018. It is an equivalent for wealthy individuals to the high risk corporates programme (HRCP) for large businesses.

Work undertaken in accordance with the HRWP is carried out within HMRC's 'wealthy team', which deals with the 700,000 or so individuals that sit within HMRC's definition of 'wealthy' – that is those individuals having incomes above £200,000 or assets above £2 million in any of the last three years.

Cases are chosen for the HRWP if there is a significant amount of tax at risk and it is thought that compliance interventions by the HRWP team will add value, perhaps because progress has stalled and/or the relationship between HMRC and the taxpayer has broken down. The HRWP team can only deal with a small number of cases at any one time and so it is likely to be only the disputes with the highest amounts at stake that will be selected.

It is possible to request, where the tax at risk is great enough, that a dispute becomes part of the HRWP programme, but whether a case becomes part of the programme is entirely a decision for HMRC.

Where a dispute becomes part of the HRWP, the taxpayer is likely to be invited with their adviser to a meeting with a senior HMRC official. This is the equivalent of the 'board to board' approach adopted for corporates under the HRCP. As well as resolving the disputes, another objective of the HRWP is to change taxpayer behaviour to reduce risk going forward.

The HRWP team seeks to resolve disputes with a collaborative approach so the taxpayer will be expected to sign up to a project plan which will involve a rigorous investigation by HMRC. The HMRC case team will involve HMRC staff across HMRC's different departments, it will have a senior HMRC case manager and there will be a point of contact for the taxpayer and their adviser.

The aim of the programme is to resolve disputes with a settlement, but any settlement will be in accordance with HMRC's litigation & settlement strategy (LSS).

The HRWP will not be used in cases of suspected evasion. In that case the Offshore, Corporate & Wealthy unit which sits within the Fraud Investigation Service (FIS) is likely to be involved although there is close collaboration between the two units, shown by the fact that in 2019/20 15% of the 573 prosecutions brought by FIS were in respect of wealthy individuals.

Implications of being within the HRWP

If a dispute is brought within the HRWP this is a serious matter for the taxpayer, who certainly needs to be represented by a tax adviser with considerable experience of dealing with HMRC disputes.

However, it can also be an opportunity for the taxpayer to get their dispute considered at a senior level within HMRC and it is likely to lead to the dispute proceeding relatively quickly. The HRWP should mean engagement of senior HMRC technical specialists and the involvement of new HMRC personnel could help to remove logjams that may have arisen as a result of HMRC and/or the taxpayer taking entrenched positions.

Given the close collaboration between the HRWP team and its sister directorate, the FIS, it is critical that, to avoid a criminal referral, representations made during the course of civil settlements are fully accurate and transparent.

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