The UK's tax authority is currently managing a staggering backlog of nearly 18,000 open investigations into the financial affairs of wealthy households, with warnings that some cases could take a decade to resolve.
A Backlog of Years, Not Months
Fresh data reveals the extensive scale of delayed probes by HM Revenue and Customs (HMRC). Out of 17,678 open compliance cases targeting wealthy individuals, a significant portion have been dragging on for years. The figures show that 4,021 investigations have been open for between five and ten years, while a further 1,131 are aged between ten and fifteen years. Perhaps most strikingly, 471 cases were initiated more than 15 years ago.
This means almost a third of all government investigations into affluent tax cheats have exceeded the five-year mark. The complexity of these high-net-worth cases, which often involve multiple income streams and international assets, is a primary cause for the lengthy timelines.
High Stakes but Mixed Results
HMRC defines a wealthy individual as someone who has earned more than £200,000 annually or held assets exceeding £2 million in any of the last three years. In the 2023-24 tax year, approximately 850,000 people in the UK fell into this category, representing around 2% of the population.
While the tax office emphasises the value of this work—citing £3.7 billion recovered from wealthy individuals last year that would otherwise have gone unpaid—the efficiency of the process has been questioned. Sean McCann, a spokesman for financial adviser NFU Mutual, highlighted a significant issue: "Many go on for too long, 46 per cent of cases closed with no yield in 2023–24, and there were only 25 prosecutions."
The Complexity of Wealthy Tax Affairs
According to the National Audit Office, the prolonged nature of these investigations is intrinsically linked to the complicated financial landscapes of the subjects. Wealthy individuals typically have affairs spanning multiple taxes, including:
- Income Tax and National Insurance on earnings.
- Capital Gains Tax, Inheritance Tax, and stamp duties on assets.
This complexity not only increases the time needed for a thorough review but also raises the potential for non-compliant behaviour. This can range from deliberate tax avoidance or evasion to the mistaken misapplication of intricate tax rules. Consequently, HMRC treats this group as a separate category from standard taxpayers, dedicating specialised resources to their cases.
An HMRC spokesman stated: "The extra resources announced in the recent spending review will allow us to significantly step up our work in this area." The government hopes that increased funding will help tackle the backlog and bring these lengthy investigations to a swifter conclusion.
