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HMRC steps up investigation of executives & directors

The taxman has turned its gaze to high profile senior executives and directors of large firms as it continues to root out possible tax avoidance issues.

There is about £400 million in underpaid taxes unaccounted for from some of the largest companies in the UK, and Her Majesty’s Revenue and Customs is looking for clues as to its whereabouts according to industry insiders. There are approximately 770 firms that are currently being investigated for possible discrepancies, especially among the executives of these companies.

Inspectors are much more aggressive this year due to the 43 per cent jump in underpaid taxes from the 2011 fnancial year, where the sum was only £280 million. There are suspicions that some high ranking executives may be using artificial tax structures to avoid having to pay national insurance or income tax on income normally subject to both, most often by claiming contract worker status or by having a possibly bogus personal service company run interference.

HMRC will mot likely be looking into the non-payroll packages of hgh level executives, according to one expert, as this area is typically where reporting mistakes can be made. The taxman is especially on the lookout for any instances where there has been a restructuring of executive’s role or income in order to reduce their PAYE and national insurance burden,

Experts say that much of the possible tax avoidance may be a result of the 50p tax, which takes 50 per cent of the income of anyone who earns more than £150,000 per annum. The new tax went into effect in 2010, though the 2012 budget calls for a reduction of the top tier tax by 5 percentage points to 45 per cent.

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