HMRC is changing the way it looks at the wealthy. Do you have anything to hide?

From a shiny Ferrari to a holiday home in Hawaii, if the super-rich have evaded tax on their riches, now is the time to come clean warns KPMG’s Greg Limb

Greg Limb is a partner in the Private Client Advisory department at KPMG.

Hot on the heels of the Tottenham Hotspur manager Harry Redknapp’s tax evasion case last month, there’s a lot of noise in the market about HMRC upping its ante to fill the tax gap – that’s the difference between the amount of tax HMRC thinks it is owed and what it actually receives.

If tax evaders think the taxman is somebody who sits there in a dusty office surrounded by papers, they’ve really got it wrong.

HMRC inspectors are using cutting-edge technology to get every last detail they want.

It is specifically targeting high-net-worth individuals, both the super rich and the mass affluent, and has already set up the High Net Worth Unit, which deals with the top 5,000 super-rich people in the country – those worth in excess of £20m. Basically, the people you see on the Sunday Times Rich List.

Within two years of putting the High Net Worth Unit in place, HMRC has had some tremendous success. It has already raised an extra £250m in revenue. Then there’s the treasury chief secretary Danny Alexander’s announcement the government will appoint another 200 tax inspectors, who will robustly work towards plugging the tax gap and putting the mass-affluent under the scanner.

There are close to 350,000 wealthy people on HMRC’s radar, and this is where London comes into the picture. The vast majority of people who’ve got wealth in excess of £2m are right here in the capital.

First on HMRC’s list are Britons who own property overseas, such as a holiday home. The rule is that an owner who is a UK resident for tax purposes has to pay tax on rental income and profits arising from the sale of overseas properties. If property owners plan to dodge this tax – well, they’re in for serious trouble.

HMRC is joining the dots and working out who’s not declared income from overseas property. It’s trying to judge if people are just being clever and buying property overseas to stay away from the radar.

I have already seen a few enquiries from HMRC coming off the back of this. The taxmen are using data-mining technology, among many other methods, to make sure they get through to the very last layer of information. They also have a team in the Midlands that just scours the internet for data about people and throws the information back to HQ.

I had a meeting with HMRC recently. The inspector came in and mentioned about six properties my client owned. None of them were showing on his tax return. In this case, they were all explainable, but my point is that HMRC had actually gone to all the trouble of finding out all the information.

So if people have got skeletons in the closet, now is the time to come clean about it. There’s probably never been a better time. There are various initiatives that HMRC is pushing forward like the ‘Disclosure Facilities’- if people own up now, they can limit the penalty. If they don’t, they could end up paying 200 per cent of the tax due in penalties.  Also, you’re currently promised anonymity and immunity from prosecution if you own up on your own.

You might recall how local tax inspectors raided Cortina d’Ampezzo, one of Italy’s most exclusive ski resorts, back in January.  The inspectors were there with tablets and computers, stopping people on the street driving flashy cars and asking them where their wealth came from, to tally it back to the records they have. They were ambushing people saying: “You’ve got a Lamborghini, what’s on your tax return? What’s your social security number?” They then tapped the numbers straight into the computer and interrogated the car owner as to how they own the car when they don’t have the wealth to demonstrate it.

Will that happen in London? It remains to be seen, but it’ll be interesting to see if tax inspectors accost people who are parading around in their posh cars in Mayfair in the summer. If you’ve been conscientious and not dodged tax you have nothing to worry about. But if you’re not squeaky clean, now is the time to come forward.

Greg Limb is a partner in the Private Client Advisory department at KPMG.