Pinsent said the data it obtained shows that HMRC received £117.2m in additional yield from its “expat” team’s compliance work in 2011-2012, up from £94.9m in 2009-2010. In 2010-2011, HMRC recouped £110.8m in additional tax revenue from the expat team.
The law firms’ director Ray McCann said: “HMRC is really cracking down on highly paid expats, most of who are working in investment banks and hedge funds. Foreign expats have always been a high yielding target for HMRC, and with the organisation trying to boost its revenue it’s not surprising that they are targeting low-hanging fruit.”
McCann also points out that the rise in additional tax take is interesting given that City bonuses and the number of investment bankers have been “slashed” since the credit crunch.
“The Eurozone crises and the economic downturn have really depressed investment banking revenues, so HMRC has had to put in a lot of extra effort to increase its take from these investigations,” he said.
HMRC’s recent focus on aggressive tax avoidance schemes is also likely to have had an impact on foreign expats who have typically used tax planning schemes to help manage their tax bills, said McCann.
“Other schemes, such as employer-financed retirement benefit schemes, are also under review by HMRC,” he added. “We would strongly advise expats being sold these schemes to seek professional help as HMRC will continue to mount a very aggressive challenge to these arrangements.”
