THE TAXMAN raised an extra £20m from investigations into foreign workers in the City last year compared with two years earlier, by applying the rules more strictly, according to HM Revenue and Customs (HMRC) data analysed by law firm Pinsent Masons.
HMRC received £117.2m from its expat team’s compliance work in 2011-12, on top of the tax already paid by foreign workers in the City.
That is up 23 per cent on the £94.9m it raised in 2009-10, despite the fall in employment and pay in financial services over the period.
“HMRC is really cracking down on highly paid expats, most of whom are working in investment banks and hedge funds,” said Pinsent Masons’ director Ray McCann. “Foreign expats have always been a high yielding target, and with HMRC trying to boost its revenue it’s not surprising they’re targeting low-hanging fruit.”
The law firm said firms easily employing foreigners can end up breaking the rules inadvertently.
“For example, if a worker comes to the UK intending to work for a few weeks, the employer can pay for their accommodation tax free,” said McCann. “But if the stay is extended to the point HMRC views it as permanent, but tax setup is not changed, the taxman swoops.”