Sarah Saunders

Written by: Sarah Saunders

Sarah Saunders

Personal Tax Manager

Wealthy want to pay right amount of tax, HMRC survey finds

HMRC has recently published a study by IFF into the drivers of tax compliance among the wealthy, defined as those with income over £200,000 or assets of more than £2m. As part of the survey a number of wealthy taxpayers and their agents were interviewed.

The results seem to have surprised HMRC more than they would surprise somebody working with wealthy taxpayers. They found:

  • most wealthy tax payers want to pay the legally correct amount of tax;
  • they dislike avoidance schemes because of the stress and uncertainty involved;
  • they want to be socially responsible and pay into society via tax, this included non-domiciled taxpayers;
  • they feel a 40 per cent tax rate is acceptable, one over 50 per cent would not be; and
  • they feel the tax system is too complex with too many grey areas.

Many wealthy taxpayers resent inheritance tax - those with inherited wealth because of the difficulties with succession, while those who were self-made had the perception the same money was taxed twice (once when they earned it, and again when they died). They were often planning to reduce this liability, but there was however no suggestion they would use potentially abusive avoidance schemes to deal with it. 

Not surprisingly, the changing attitude to avoidance seems to have led to the wealthy becoming more risk averse when it comes to tax planning. 

The conclusions of the report were that the rich could be encouraged to comply by emphasising the benefits society got from the tax they paid, and highlighting the trouble and stress caused by avoidance schemes if they went wrong. The taxpayers and agents also suggested that there should be more clarity about which schemes are acceptable to HMRC and those launching unacceptable schemes should be dealt with directly by HMRC via the courts.

While this was only a qualitative survey, and one must accept that the answers given to HMRC may not accurately reflect actual actions, the responses seem consistent and provide a contrast to the regular portrayal of the rich as scheming to avoid paying tax by all means possible. Certainly, in my experience the survey provides a much more accurate view of the attitudes of wealthy taxpayers, who are generally conscientious about their taxes and anxious to do the right thing.

Add comments

Related blog articles

Share your thoughts

*These fields are mandatory

Comments