Wealthy individuals and mid-sized business compliance: technical note
Published 30 July 2024
© Crown copyright 2024
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/hmrc-annual-report-and-accounts-2023-to-2024-technical-notes/wealthy-individuals-and-mid-sized-business-compliance-technical-note
HMRC’s approach to tax compliance for wealthy individuals and mid-sized businesses
HMRC’s Wealthy and Mid-sized Business Compliance (WMBC) Directorate aims to put compliance and customer service at the centre of everything we do, by focusing on ‘customer segments’ rather than different types of tax, so we can target and coordinate our responses more effectively.
We focus on wealthy individuals and mid-sized businesses, as well as public bodies, trusts and charities, providing insight into the wealthy and mid-sized population, their tax affairs and the businesses they own or influence. We also deal with a wide range of risks, including employment status and intermediaries, Inheritance Tax and various incentives and reliefs.
We also have a key part to play in promoting and supporting the growth that mid-sized businesses bring to the UK economy. This is part of HMRC’s wider work to promote growth and minimise cost to business, while maximising compliance.
Our approach is to increase voluntary compliance among these groups using approaches which promote compliance and prevent non-compliance and challenge those who break the rules.
In 2023 to 2024, WMBC achieved compliance yield of £9,364 million as shown in the table below.
Compliance yield for the WMBC Directorate in financial year 2023 to 2024
The following table shows the compliance yield generated by the WMBC Directorate during 2023 to 2024. The tax regime compliance yield is reported on the same basis as the Annual Report and Accounts.
WMBC Directorate
| Tax Regime | 2023 to 2024 (£m) |
|---|---|
| Corporation Tax | 1,676 |
| Excise | 0 |
| Income Tax | 4,218 |
| VAT | 2,249 |
| Other compliance interventions | 1,221 |
| Total | 9,365 |
Tax under consideration
Tax under consideration is an estimate of the maximum potential additional tax liability in each case, before we have carried out a full investigation of the specific facts, or analysis of relevant law. It is not actual tax either owed or unpaid, it is a tool to guide our enquiries to focus on the most significant risks that exist at any particular time.
In many cases, when we have looked at the full facts, it becomes clear that there is some lesser liability or even no further liability at all. Tax under consideration will naturally vary from time to time as outstanding issues are settled and new risks are identified.
The total is a snapshot of work in progress at a given point. Tax under consideration covers all taxes and duties, including but not limited to Income Tax, Corporation Tax, VAT, PAYE and National lnsurance Contributions and Inheritance Tax.
The following table shows a snapshot, as of 31 March 2024, of the tax under consideration figure for enquiries by HMRC’s WMBC Directorate:
| Inaccuracy category | Tax under consideration as at 31 March 2024 (£) |
|---|---|
| Accounting standards | 45,231,785 |
| Amended returns | 3,519,366 |
| Apprenticeship Levy | 0 |
| Avoidance | 1,387,180,224 |
| Capital allowances | 84,993,946 |
| Capital Gains | 579,208,171 |
| Charities | 68,859,197 |
| Claims outside returns | 21,488,673 |
| Company structure | 309,705,659 |
| Consideration | 1,078,978 |
| Corporation Tax Capital Gains | 130,317,326 |
| Creative industry and cultural reliefs | 71,622,289 |
| Crypto assets | 162,900 |
| Earnings | 170,416,066 |
| Employment issues | 693,348,982 |
| EU issues | 1,245,202 |
| Failure to notify and late returns | 39,695,465 |
| Financial | 120,753,637 |
| General income | 59,002,138 |
| Group litigation order | 617,991 |
| High Income Child Benefit Charge | 58,746 |
| Income and Expenses | 622,977,005 |
| Inheritance Tax | 325,084,706 |
| Input tax overclaimed | 73,715,028 |
| Intangible asset regime | 97,723,289 |
| International | 2,217,362,112 |
| Investment Income | 41,559,035 |
| Land and property | 123,949,623 |
| Loss relief | 76,848,225 |
| Management expenses | 2,650,306 |
| Other issues | 361,592,237 |
| Output tax underdeclared | 180,233,896 |
| Partial exemption | 159,807,696 |
| Partnership issues | 217,177,510 |
| Patent box | 5,168,723 |
| Pension schemes | 140,670,310 |
| Pre Return Work | 15,973,110 |
| Provisional Figures | 2,293,426 |
| PSA/Dispensation | 7,096,953 |
| Research and Development claims | 640,949,173 |
| Stamp Duty | 127,775,778 |
| Statutory allowances/reliefs | 147,822,388 |
| Tonnage Tax | 0 |
| Trading and computations – receipts and deductions | 277,511,901 |
| Trusts | 63,285,452 |
| Valuation | 90,081,857 |
| VAT error | 634,914,160 |
| VAT evasion | 78,993,954 |
| VAT legal interpretation and boundary pushing | 1,011,713,533 |
| Venture Capitals | 326,179,041 |
| Voluntary Disclosure | 6,104,794 |
| Total | 11,865,721,962 |
Note: Figures that could risk identifying entities have been aggregated and provided as ‘other issues’ within the table.