HMRC - Key Target Areas for 2022
Article written by Joshua Fowler, Solicitor at Irwin Mitchell
Gary Ashford, a partner at Harbottle & Lewis, and Morag Ofili, a senior associate, recently commented in the Tax Journal with their predictions for areas in taxation that HMRC may target in in 2022. In particular they have highlighted:
- Crackdown on Crytpoassets – HMRC, in comparison to some other jurisdictions, have been alive to the rise of cryptoassets and have therefore established their fundamental approach to the taxation of these assets. Whilst there are some areas that are open to review, the approach is somewhat solidified enough that HMRC will be confident in pursuing owners of cryptoassets who are not compliant with the rules. “Nudge letters” have already been sent to reinforce the potential tax position, in particular recording any CGT liabilities in self-assessment returns, and it is likely these investigations will continue
- Targeting UK non-domiciled individuals – the change in law in 2017 relating to domicile/residence is still causing confusion for taxpayers. One particular area is the Remittance Basis Charge (RBC) which is linked to the number of years the taxpayer has been resident and can be up to £60,000 for the year. This is claimed and paid on the individual’s self-assessment tax return and HMRC could look at whether taxpayers are paying the lower RBC by mistake.
- Working from Home – an employee’s residence status may have a serious impact on how their employment income is taxed and where employees are now more frequently working remotely, possibly outside of the UK, their residence status may be subject to change. An employee’s tax position may also affect the company’s residence position due to the permanent establishment rules when the facts are assessed. While these rules were relaxed at the start of the pandemic, the ongoing reality of remote working means these issues are more likely to crop up in 2022
The article also highlights the IR35 rules, furlough fraud cases and the end of the VAT deferral scheme as areas HMRC may target in an attempt to generate funds.
Our view
The cost of the pandemic is a key talking point and investigations and enforcements by HMRC are a lucrative way to start recovering those costs. This was highlighted in the most recent Budget. Where the rules are new or complex, such as with non-domiciled individuals or Cryptoassets, the best way to protect yourself from penalties is to take detailed advice before taking any actions. It may also be more cost and time effective to review your previous actions before HMRC begin their investigation as this will allow you to rectify any mistakes that you may have honestly made.
Find out more about our expertise in international tax.
HMRC, in comparison to some other jurisdictions, have been alive to the rise of cryptoassets and have therefore established their fundamental approach to the taxation of these assets.”
