Understanding key tax risks for high-net-worth individuals

Over recent years, HMRC has increasingly focused on the tax affairs of high-net-worth individuals and complex structures. As the UK government seeks to address fiscal shortfalls, the likelihood of tax enquiries and disputes is at its peak. At Verallo, we’ve seen firsthand how even well-intentioned taxpayers can find themselves under scrutiny.

In this article, I share insights on why this is happening, highlight the common areas of risk, and offer practical guidance for safeguarding your tax position.

A rise in HMRC reviews

Outside of PAYE, it has always been the expectation that taxpayers are responsible for accurately reporting income, gains, and other relevant financial information each year via self-assessment. HMRC has the authority to examine these filings, which can lead to extended correspondence or formal investigations.

Let’s look at some of the factors that have contributed to the increase in HMRC reviews.

Self-assessment discrepancies

Taxpayers submit annual self-assessment tax returns, which serve as the basis for HMRC enquiries. Even where taxpayers report honestly, discrepancies, missing information, or complex arrangements can trigger further review. The process may involve detailed correspondence or extended investigation periods, sometimes spanning several years.

Revenue gap priorities

At the core of HMRC’s activity is the need to address gaps in tax collection. Economists estimate the UK is currently facing a shortfall of around £40 billion, making accurate reporting a key element of public finance management. Identifying tax gaps or underreported income and gains helps the government maintain revenue levels.

AI and data analysis

New AI and data analytics tools are being used to detect inconsistencies across tax filings. These systems enable the department to prioritise enquiries and focus on cases with higher potential discrepancies.

Legal standards and evidence requirements

Recent court decisions emphasise the need for clear factual evidence to support tax positions, particularly in cases involving offshore structures or complex arrangements. HMRC takes these legal interpretations into account when reviewing filings.

Legislative changes

Reforms affecting non-domiciled individuals, trusts, and residency rules have layered additional complexity onto existing tax law. Multi-jurisdictional arrangements and new asset classes, such as cryptocurrency, mean previously compliant structures may now require updated reporting.

International information exchange

Through agreements such as the Common Reporting Standard, HMRC receives data on overseas income, assets, and ownership. These exchanges allow verification of information declared in the UK.

Focus areas for investigation

From our work with clients, certain aspects of tax reporting frequently attract detailed examination. One such area is an individual’s previous domicile, which can still affect inheritance tax and earlier remittance claims – HMRC monitors these carefully.

Residence status is another key factor. Changes in personal circumstances, such as time spent in or out of the UK, can influence whether an individual, trustee, or company is treated as UK resident. Accurate records of movements and decision-making remain important.

Claims for reliefs – including charitable donations, property reliefs, and treaty benefits – also attract attention, with eligibility often dependent on specific factual circumstances.

Income or gains brought into the UK before April 2025 remain taxable, even though the remittance basis no longer applies to new earnings. Errors in identifying what counts as a remittance are common, making careful documentation essential.

And finally, exemptions under anti-avoidance rules depend on the purpose of arrangements beyond reducing UK tax. These defences are complex and may be challenged if evidence is unclear.

How Verallo supports clients in meeting their tax obligations

We take a proactive approach to helping clients stay compliant with UK tax requirements. Our team provides tailored support to clarify obligations, identify adjustments if needed, and plan the most effective way to meet reporting requirements.

• A key part of this is encouraging regular reviews of their overall tax position to ensure that filings remain consistent with current rules – this includes any place(s) of residence, repatriated income, overseas trusts and companies, and any multi-jurisdictional arrangements
• Accurate and well-organised documentation is essential for demonstrating compliance. We assist clients in maintaining records such as work arrangements, travel logs, board or trustee minutes, and other supporting materials, so they can be readily produced if HMRC requests them.
• For sensitive or complex matters, we work closely with legal advisers to ensure communications are protected where possible. This helps safeguard clients’ positions while allowing for careful consideration of all available options.
• Where potential issues are identified, we guide clients through voluntary disclosure processes. By addressing matters early and transparently, clients can often reduce the risk of penalties and simplify the administrative process.

Get in touch for support

If you would like guidance on reviewing your tax position, ensuring compliance, or navigating complex arrangements, get in touch with our team who can provide tailored advice and practical support.