The Institute is conducting discussions with HMRC regarding high net worth taxpayers. Some help material is emerging on risk rating along with some suggestions on how funding/payments issues can be dealt with; both were discussed.

The NI Tax Committee recently met with the head of HMRC’s High Net Worth Unit (HNWU) in East Kilbride. The East Kilbride unit deals with almost every high net worth (>£20 million) NI taxpayer.

Risk classification

As part of the HNWU’s exercise to classify taxpayers according to their risk profile, HMRC shares some key themes/risks emerging across this population. These include but are not limited to:-

• Property issues;
• Loss claims;
• Capital v revenue distinction;
• Cross-border issues (mainly indirect);
• Farming issues; and
• Funding issues e.g. more restrictive lending terms

The NI Economy

The Committee discussed recent economic developments in NI to provide context on how this may impact on the tax affairs of HNWU taxpayers. NI is likely to see an enhanced private sector in the coming years as a consequence of austerity measures in the public sector and corporation tax devolution. That could mean more NI HNWU taxpayers in the future.

Dealing with issues in real time

HMRC expressed a desire to deal with potentially contentious issues/transactions more in “real time”. Issues can be raised as they happen and discussed with the unit and clearance applications sought were appropriate; this has the benefit of having all the paperwork etc. available fresh at the time with a clear additional benefit once the tax return for the relevant year is submitted.

However, it was recognised that whilst this approach seems sensible and could provide the taxpayer with more certainty, on a practical level this may not work as taxpayers don’t always involve their agent at the time. Again HNWU would recommend speaking to your client’s CRM.