The amount of tax HMRC believes High Net Worths owe on Stamp Duty jumps by a third in past year to £80m

Wealthy individuals also suspected of underpaying £48.3m in tax relating to trusts in the last year

The amount of tax that HMRC believes has been underpaid by wealthy individuals relating to Stamp Duty has jumped by 32% in the past year, to £80.3m, up from £61m the previous year, says RPC, the international law firm.

HMRC has also sharply increased its estimate of the amount of money that it suspects has been underpaid by wealthy individuals relating to trusts – that has jumped 24% to £70.7m, up from £48.3m in 2020-21.

RPC says HMRC is making increasing use of information shared by overseas tax authorities to identify wealthy individuals who may have underpaid tax by using  trusts that have been established overseas. The process of information exchange under the Common Reporting Standard, means that HMRC now receives data from over 100 tax authorities around the world. HMRC can then cross reference this against tax returns received from individuals.

Adam Craggs, Partner and Head of Tax Investigations at RPC says: “When HMRC increases its estimate of tax avoidance or evasion in a particular area you can expect an increase in investigations focussed on that area.”

“HMRC now has access to a wealth of information regarding assets held overseas by HNWs and it would be surprising  if it did not make full use of this information. ”

RPC says HMRC is also looking more closely at Stamp Duty tax returns to identify cases which it considers relief has been wrongfully claimed. This can include claims for multiple dwellings relief. HMRC believes that up to a third of claims for this type of relief are incorrect.

Constantine Christofi, Senior Associate at RPC says: “Rising house prices has led to greater Stamp Duty liabilities, particularly at the higher end of the property market, which has incentivised some people to seek to mitigate their tax liability. HMRC is determined to claw back any tax which it believes has been underpaid by wealthy individuals who have purchased high value residential properties.”