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*HMRC launches 25 criminal tax fraud investigations*

_*HMRC’s offshore, corporate and wealthy unit opened 25 criminal tax fraud probes worth between £150m and £4bn last year*_

The wealth unit, which has around 500 HMRC staff, holds a wide range of criminal and civil powers but reserves criminal processes for its most serious investigations.

As part of HMRC’s fraud investigation service, the wealth unit was set up in the wake of the Panama Papers leak in 2016 to investigate serious non-compliance by businesses and the wealthiest taxpayers.

Over the past decade, HMRC’s approach to economic crime enforcement has evolved to focus on the largest and most complex cases of tax fraud with 25 open cases looking into major risks of tax evasion.

According to HMRC, in 2009/10 the tax authority undertook just 156 prosecutions, protecting approximately £150m in tax revenue.

This number had risen substantially by 2019/20, with prosecutions jumping to 573, with around £5bn of revenue protected.

Pinsent Masons said that the current threshold for ‘wealthy individuals’ to be investigated by the unit are those earning over £200,000 per year. This includes international tax evasion and professionals who deliberately enable others to evade tax.

Investigations by the specialist unit included a probe into former BHS owner Dominic Chappell, who was sentenced to six years of imprisonment in 2020 after evading over £600,000 in tax.

One of the largest ongoing cases is into former F1 boss Bernie Ecclestone, who is due to stand trial in October 2023 following an alleged failure to declare £400m in overseas assets.

Andrew Sackey, partner at Pinsent Masons and former head of the wealth unit at HMRC, said: ‘As the name implies, the offshore, corporate and wealthy unit is the spearhead for HMRC’s drive to tackle the most complex and impactful cases of tax evasion and fraud. It is aiming to secure prosecutions against corporates or wealthy individuals whose deliberate actions are believed to have defrauded the public purse of hundreds of millions of pounds.

‘The Treasury consistently provides HMRC with significant funds and resources each year to investigate a range of serious non-compliance including the suspected conduct of high net worth individuals.

‘If the amount of tax revenue it protects through these investigations keeps rising, the government is likely to continue to invest in this high-end form of tax enforcement.’

HMRC continues to increase the use of data-sharing between government agencies worldwide and public-private partnerships.

In 2022 it attended two major summits between the J5 group – a coalition of the tax enforcement authorities of the UK, US, Canada, Australia and the Netherlands.
These talks were aimed at securing greater cooperation between banks and tax authorities in preventing tax and financial crime.

Sackey added: ‘HMRC and its counterparts overseas are making it increasingly likely that tax investigations, evasion and fraud will be detected. The amount of data shared between them each year is growing substantially – as is their ability to process and understand that data to identify enforcement opportunities.

‘As financial institutions are increasingly brought into that fold as trusted partners, that process is only going to accelerate.’

https://www.moneymarketing.co.uk/news/hmrc-opens-25-new-tax-fraud-investigations-into-wealthy-individuals/

https://www.ifcreview.com/news/2023/march/uk-hmrc-opens-25-new-tax-fraud-investigations-into-wealthy-individuals/

https://www.paminsight.com/epc/article/hmrc-opens-25-major-criminal-hnw-tax-fraud-investigations

https://committees.parliament.uk/writtenevidence/115783/pdf/

https://www.wlhtax.co.uk/services/hmrc-code-of-practice-9-cop9-contractual-disclosure-facility-cdf/?gclid=CjwKCAjwov6hBhBsEiwAvrvN6DmlpTPwyKeKrL83BE232AjJz7nNusOad6jKHIWO4VzRh0pwObr6dRoCeBAQAvD_BwE

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*Personal tax changes from 6 April 2023*

_*Frozen tax thresholds will see more taxpayers dragged into higher rate 40% tax this year, dividend allowance and capital gains tax allowances slashed*_

Base rate and higher rate thresholds are frozen until 2028 at £12,570 and £50,271 respectively. This will pull more taxpayers into higher rate tax, with over a million expected to face 40% tax charges for the first time as a result of the freeze.

The additional rate threshold will be lowered from £150,000 to £125,140 from 6 April and this is the income level at which an individual will not have any personal allowance, because £1 of the personal allowance is withdrawn for every £2 of income above £100,000.

The change in the threshold will see an additional 232,000 taxpayers drawn into additional rate tax for the first time, according to HMRC. For those with income between £125,140 and £150,000, the average cash loss is £621.

The reduction in allowance is expected to raise £420,000 in tax year 2023-24 and will affect around 792,000 taxpayers.

In Scotland, there will be increases in various personal tax rates. The higher rate of tax paid on income between £43,663 and £125,140, will increase by 1p to 42p, and the top rate of tax (paid on income above £125,140) will increase by 1p to 47p.

It means that Scots with earnings above £43,663 will pay more income tax than they did last year, with the decision to increase the higher and top rates widening the difference in income tax liabilities between those on equivalent earnings in Scotland and the rest of the UK.

John Cullinane, CIOT director of public policy, said: ‘The start of the year means further income tax divergence for higher earning Scots.

‘For those on lower incomes, the tax system will continue to be slightly more generous. This is due to the 19p Scottish rate of tax.

‘The Scottish government’s decision to tax higher earners more is intended to generate extra money to fund public services, but it may further fuel perceptions of a growing disparity between the tax treatment of higher earners in Scotland and elsewhere in the UK.’

_*Dividend tax*_
The dividend allowance will be reduced to £1,000 from 6 April 2023 and then to £500 from 6 April 2024. This is a major fall from the £2,000 level in the year to 5 April 2023.

Glenn Collins, head of technical and strategic engagement at ACCA, said: ‘This cut means that many individuals who have not previously engaged with HMRC are now going to have to do so. It looks likely that a lot of those people who will now be asked to report their dividend income to the tax authorities will be retired people.

‘They will now have a notification obligation although in all likelihood they will not be higher rate taxpayers and they will not be required to pay any extra tax.
Capital gains tax

A cut in the capital gains tax allowance mean that taxpayers will start paying tax on gains in excess of £6,000. The annual exempt amount will be £6,000 for individuals and personal representatives, and £3,000 for most trustees. Note that is exempt allowance will be reduced further in 2024-25 to £3,000 for individuals, and only £1,500 for most trustees.

The reduction will mean that around 500,000 individuals and trusts per year could be affected, increasing on a cumulative basis to 570,000 in 2024-25.

The rates of capital gains tax remain unchanged at 10% basic rate and 20% higher rate, but on residential property, apart from primary residences, the rates are 18% and 28% depending on earnings bracket.

The government has also abolished the annual uprating of the annual exempt amount in line with CPI and and has fixed the CGT reporting proceed limit at £50,000.

_*Pension tax*_
On pensions, the lifetime allowance charge which kicks in a £1.03m will be removed before being abolished altogether in April 2024.

The annual allowance and the minimum tapered annual allowance will be increased from £40,000 to £60,000, which the government said would incentivise highly skilled workers to remain in the labour market. As a result of the pensions tax measures, an estimated 80% of NHS doctors will not receive a tax charge with respect to accruals under the 2015 NHS career average scheme.

The adjusted income threshold for the tapered annual allowance will be increased from £240,000 to £260,000.

The money purchase annual allowance (MPAA) limit has been increased to £10,000 from current £4,000. This means that anyone who has made a drawdown from their pension will no longer be limited to a £4,000 cap on the amount they can pay into their pensions pots a year.

The maximum pension commencement lump sum for those without relevant protections will be retained at its current level of £268,275 and will be frozen thereafter. Lump sums currently taxed for some individuals at 55% above the lifetime allowance will be taxed at an individual’s marginal rate of income tax.

_*Capital gains tax*_
There are changes to the capital gains tax (CGT) rules that apply to transfers of assets between spouses and civil partners who are in the process of divorcing or separating. The changes will take effect for disposals made on or after 6 April 2023.

Spouses or civil partners will be given up to three years, after the year they cease to live together, to make no gain or no loss transfers of assets, and unlimited time when the assets are the subject of a formal divorce agreement.

A spouse or civil partner who retains an interest in the former matrimonial home will also be given an option to claim private residence relief (PRR) when it is sold.

https://www.gov.uk/government/publications/lowering-of-the-additional-rate-threshold/income-tax-additional-rate-threshold-from-6-april-2023

https://www.which.co.uk/news/article/6-tax-changes-to-watch-out-for-in-2023-aGdW72I9sSxc
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1137119/P9X_2023.pdf

https://www.theweek.co.uk/business/personal-finance/959495/changes-to-income-tax

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Income Tax Additional Rate Threshold from 6 April 2023 We’d like to set additional cookies to understand how you use GOV.UK, remember your settings and improve government services.

*Q&A: breaching national minimum wage rates*

_*This article explains the April increases to national minimum wage rates and how to avoid breaching the rules*_

My client has approached me about the increases to national minimum and living wage (NMW/NLW) from April. They are worried about breaching the rules, as paying a fine will be more costly than ever. I would like to reassure them and explain common breaches of NMW/NLW, so they know what to avoid.

The increases apply in the next ‘pay reference period’ after the increase. For example, if X gets paid on the 15th of the month, the old rate applies until the 15th, and the new one from the 16th. To avoid misunderstandings, your client might want to explain this to their staff.

*Falling foul of the law*
The consequences of failing to pay NMW/NLW can be costly:
• fines at 200% of arrears (reduced to 100% if paid within 14 days, subject to a maximum of £20,000 per unpaid worker);
• repayment of arrears, calculated at the current rate of NMW/NLW;
• criminal proceedings for the most serious breaches.

*Common mistakes*

_*Keeping up with entitlement*_
16% of those publicly ‘named and shamed’ by the government for breaching the NMW/NLW blamed failing to increase pay in line with entitlement. Your client should therefore be careful keep on top of employee birthdays.

If your client employs apprentices, that rate is only paid in the first year; thereafter, only to those under 19. Your client should therefore be aware of when they:
• move into year two (if 19 and over);
• turn 19 (after year one); and
• finish their apprenticeship.

These events mean they must be paid the appropriate NMW/NLW rate from the next ‘pay period’.

_*Deductions*_
Certain deductions can cause pay to fall below NMW/NLW, and not breach the law, such as income tax and National Insurance; recovery of accidental overpayment or pay advances; pension contributions; student loan repayments; trade union fees; and accommodation offsets.

However, other deductions and expenses can be unlawful and lead to an underpayment of NLW/NMW. These include deductions for:
• tools;
• uniforms;
• travel costs (except commuting costs); and
• training courses.

For example, where an employee must purchase a uniform, their total pay minus the uniform cost cannot be below the applicable NLW/NMW rate.

_*Working time*_
Where travelling is essential to the job, eg, delivery drivers / travelling salespeople / domiciliary carers, they should be paid to travel between clients. Time spent travelling from home to their starting point (their commute) need not always be.

_*Trial shifts*_
This depends on whether the trial is to test ability or provide value. Working a normal shift where they are not observed or given guidance is likely to attract the need to pay NMW/NLW.

For example:
• chef prepares dishes under observation – likely a genuine trial, no pay entitlement;
• chef works a kitchen service and is left to work alone – likely providing value and not a genuine trial, NMW/NLW due.

Please also note other changes from April:
• family friendly statutory payments increase from £156.66 to £172.48 on 2nd April 2023;
• statutory sick pay (SSP) increases from £99.35 to £109.40 on 6 April 2023.

https://www.acas.org.uk/national-minimum-wage-entitlement/if-an-employer-does-not-pay-minimum-wage

https://www.gov.uk/government/news/employers-named-and-shamed-for-paying-less-than-minimum-wage

https://www.gov.uk/government/publications/minimum-wage-rates-for-2023

https://www.gov.uk/government/publications/enforcing-national-minimum-wage-law/national-minimum-wage-policy-on-enforcement-prosecutions-and-naming-employers-who-break-national-minimum-wage-law

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The Government has announced the rates of the National Living Wage (NLW) and National Minimum Wage (NMW) which will come into force from April 2023. In doing so, it has accepted in full the recommendations of the Low Pay Commission.

*More tax avoidance promoters named by HMRC*

_*HMRC has added four companies to its list of tax avoidance scheme promoters, advising people to steer clear of the firms as they are flouting the law*_

The companies are *Countrywide Partners Ltd (CPL), Industria PAYE Ltd (IPL), Pure Invoicing Ltd (PIL) and U R Group Ltd (URGL)*.

The tax avoidance schemes are similar to those operated by firms already on HMRC’s promoters list as they are third party agencies which pay staff contracted to businesses through a mixture of national minimum wage rates topped up with loans, which are not taxed, leaving the individuals exposed to tax investigations.

‘If you are involved in any of the tax avoidance schemes shown on the lists, or recognise any of the promoters, enablers or suppliers, and are not already talking to HMRC about your tax position you should contact HMRC as soon as possible,’ HMRC said in its latest update.

*Countrywide Partners Limited* (CPL) invoice and receive payment from end user clients and retain a fee of 15% of the gross amount received. Scheme users enter into a ‘Bonus, Incentive or Pay Scheme Offer’ called the ‘bonus agreement’ and a separate loan agreement with CPL. The loan agreement states that CPL will loan certain monies, secured against any ‘bonus’ payments. They pay the scheme user either a national minimum wage (NMW) or national living wage (NLW) salary which is taxed under PAYE. The remaining amount is paid in the form of a loan. This amount is not taxed under PAYE.

*Industria PAYE* and *Pure Invoicing* both offer scheme users their gross contract value in a payment made up of two separate elements. The first element was a national minimum wage (NMW) salary that was taxed through PAYE. The second element was an option grant agreement which was not taxed.

UR Group again split payments for scheme users so that they received part of the pay based on national minimum wage (NMW) rates of between £60 and £70 per day. The second payment was in the form of a loan which did not go through PAYE and this payment was not taxed.

https://www.gov.uk/government/publications/named-tax-avoidance-schemes-promoters-enablers-and-suppliers/current-list-of-named-tax-avoidance-schemes-promoters-enablers-and-suppliers

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Our sincere thanks to Author of the original post.

Current list of named tax avoidance schemes, promoters, enablers and suppliers We’d like to set additional cookies to understand how you use GOV.UK, remember your settings and improve government services.

https://youtu.be/5jbWLWhr9E8

Martin Lewis’s Mini-Budget Instant Explainer - Stamp Duty cut (Eng & NI) how it’ll work- National Insurance & Income tax changes, how it affects you

Infographic: A Breakdown of the Rising Cost of Living

This chart shows a break down of the cost of living for one working adult in 2022.

Source: Statista

There are big days for the UK economy

BOE's Monetary Policy Committee will announce its latest decision today, with analysts divided over whether to expect a hike to interest rates of 50 or 75 basis points.

Tomorrow the new Chancellor Kwasi Kwarteng will make his first fiscal statement since taking office. New policies are expected to include strategies for economic growth and to provide reassurance to households in the context of the rising cost of living.

Measures may include:

💷Cutting National Insurance (NI)

💷 Scrapping a planned increase in corporation tax

💷 Possible cuts to other taxes, including stamp duty

💶 Ending the cap on bankers' bonuses