Published in Wealth & Finance International
A positive approach to high net worth individuals by HMRC is yielding rewards for the UK economy, says Nataliya Makhonina-Byrdan from multi-family office Oracle Capital Group.
Tax officials do not have a reputation for being happy, smiling people. But a statistic just released by the UK’s HM Revenue and Customs (HMRC) has raised a smile on the faces of the taxman and the Treasury: in the last five years high net worth individuals (HNWIs) have contributed an extra £1bn to the UK economy.
In 2009, HMRC launched a “high net worth unit” to deal with the tax affairs of people with a net worth of over £20m. Specialists in the unit work with HNWIs to ensure they voluntarily pay the right taxes.
HMRC takes the approach that most people are ready and willing to pay tax that is due, and that it is only a minority who try to avoid their responsibilities. They accept, too, that individuals may not always be aware of what is expected of them, hence the cooperative, rather than confrontational approach.
Clearly, this is working. In the first year of the HNW unit’s existence, an extra £85m was raised in tax revenue. In 2013-14, this rose to £268m. The target for the first five years was £894m. The fact that already £1bn has been raised is seen as a notable success by the taxman and a vindication of the positive approach.
HMRC had good reason to create the HNW unit in the first place, as Britain is home to many of the world’s wealthiest people. Indeed, earlier this year the global property consultants, Knight Frank, concluded in their annual Wealth Report that London has overtaken New York as the most desirable city to live for the wealthy. It’s estimated that almost 6,000 ultra high net worth individuals live in London; not only more than in New York but more than twice the number in Paris. The UK is seen as having great advantages from both the professional and the personal point of view.
Business-wise, London is in a favourable time zone for connecting with just about anyone, anywhere in the world. The economy is stable, making it worthwhile complying with tax legislation, which, in any case, is seen as flexible. The legal system works well and is fair. Financial Institutions are strong.
The UK is seen as a comfortable place to live. The streets are safe. The schools the wealthy send their children to provide a sound education, which can be continued at some of the best universities in the world. Cultural life is of a high standard. And English is the most widely-spoken language in the world.
It seems that in the UK both the HNWI and the taxman have good reason to be smiling.
About the author
Nataliya Makhonina-Byrdan is head of business development at multi-family office Oracle Capital Group, and is responsible for building long-term relationships with clients and partners, promoting the company to new and existing markets. She has more than nine years of experience in the financial services sector, five of those within business development roles.
Should you wish to receive recommendations, ask questions or get in touch with our experts , please email us info@orcap.co.uk or call +44 (0) 207 725 6900
