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HMRC’s affluent unit to investigate owners of holiday homes

HMRC’s affluent unit to investigate owners of holiday homes

Contractors who own holiday homes abroad need to be aware that HMRC has set up a new team of tax investigators to look into possible tax avoidance. The Treasury hopes to net at least £500 million from this new initiative by 2014-15.

The “affluent unit” team will consist of 200 investigators and specialists will use software to search through publicly available information in the hope of identifying people who own overseas property and who should have been paying income tax on rental income, or if a property has been sold – capital gains tax.

The investigators will make use of “risk assessment” tools in order to highlight individuals who do not seem to be declaring the right income and gains, as well as those who do not appear to have been able to afford to buy the property legitimately.

Owners of holiday homes will also be asked how they funded the purchase and whether they are declaring it as a source of income.

An HMRC spokesperson said the affluent unit would be targeting individuals with assets of at least £2.5 million, as well as those who should being paying the top rate of income tax. The unit will be modelled on the High Net Worth Unit, which brought in £247 million in its first two years.

This focus on overseas homes is another part of HMRC’s wider crackdown on tax evasion. David Gauke, the exchequer secretary to the Treasury, explained that HMRC has demonstrated increasing success in tackling tax evasion at home and abroad. The government is giving out a clear message that tax cheats no longer have anywhere to hide.

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