HMRC Crackdown HNWI: Wealthy Taxpayers Face Investigations

The UK tax landscape is entering a new era of enforcement. HMRC has been allocated an additional £100 million in funding and is in the process of recruiting 5,500 new compliance officers. With this expanded workforce, HMRC has set a clear target: increase prosecutions for tax offences by 20% over the next five years.

For high-net-worth individuals (HNWIs), this means a much greater likelihood of scrutiny. HMRC is not only using its traditional powers but also tapping into publicly available information from civil court proceedings, such as divorce cases, probate disputes, and insolvency hearings.

HMRC’s New Enforcement Drive

The recruitment of 5,500 additional compliance officers represents one of the largest expansions in HMRC’s enforcement history. The funding and staffing boost serve two purposes:

1. Increasing the volume of tax investigations – particularly targeting high-value cases involving HNWIs.
2. Raising prosecution numbers – HMRC is mandated to lift prosecutions by 20% in the coming years.

This is not just about increasing revenue. It’s also about deterrence. HMRC wants to send a strong message: wealthy taxpayers who attempt to exploit legal loopholes or conceal assets will face tougher enforcement action.

Civil Court Proceedings: A Hidden Source of Tax Intelligence

While HMRC has powerful investigative tools, one of its most effective strategies involves examining information disclosed in unrelated civil court proceedings.

Examples of useful cases for HMRC include:

• Divorce proceedings – where both parties must provide a full and frank disclosure of their assets.
• Probate and inheritance disputes – often revealing offshore trusts or undeclared inheritances.
• Insolvency litigation – exposing business debts and hidden financial structures.
• Trust disputes – highlighting complex wealth structures designed for tax efficiency.

These proceedings often force individuals to reveal details they might never otherwise disclose, creating a trail of evidence HMRC can exploit.

Case Study: Standish v Standish (2025)

A recent high-profile example is the Supreme Court judgment in Standish v Standish (2 July 2025).

At the heart of the case was £80 million transferred into the wife’s sole name in 2017. This transfer was originally intended as a tax planning measure to mitigate inheritance tax (IHT), with the funds expected to move into an offshore trust. However, the wife kept the funds, sparking a dispute in divorce proceedings.

What followed was a public examination of the couple’s private financial arrangements—typical in divorce cases but highly revealing for outside observers, including HMRC.

The Standish case illustrates how wealth management strategies can become exposed in unrelated legal disputes, providing HMRC with valuable leads.

Disclosure Rules: Why Private Finances Become Public

Unlike criminal trials, where defendants are not obliged to incriminate themselves, civil proceedings require full disclosure.

• Full and Frank Disclosure – Parties must provide all relevant financial information, even if it harms their position.
• Document Disclosure – Defendants must conduct a reasonable search for relevant documents under their control.
• Court Records – If documents are read aloud or referred to in open court, they can become accessible to third parties, including HMRC.

This means a tax-efficient structure that remained private could become public record during litigation.

How HMRC Uses Civil Proceedings in Investigations

HMRC is not limited to passively observing court cases. It can actively use disclosed information in multiple ways:

1. Direct Evidence – If material is read out in open court, HMRC can use it in criminal tax investigations.
2. Permission Requests – For material not made public, HMRC can apply for court permission to access and reuse documents.
3. Intelligence Gathering – Even where civil material cannot be formally used in prosecutions, it can guide investigators towards other legal avenues, such as production orders for bank statements.

In practice, once HMRC becomes aware of irregularities, the window for voluntary disclosure may close quickly.

The Risk of Missing the Contractual Disclosure Facility (CDF)

The Contractual Disclosure Facility (CDF) allows individuals to admit to tax fraud and make a full disclosure in exchange for immunity from criminal prosecution. However, once HMRC already has evidence—or strong intelligence—from court proceedings, it may be too late to access the CDF.

This is why wealthy taxpayers should act proactively, ensuring their tax affairs are compliant before their private financial arrangements risk exposure in civil disputes.

Why the Risk of Investigation Is Increasing

Several factors are converging to make investigations into wealthy taxpayers far more likely:

• More HMRC resources – 5,500 new investigators means more capacity for targeted audits.
• Pressure on tax revenues – The government is keen to close the tax gap, particularly among the wealthy.
• Digital and cross-border data sharing – Automatic exchange of financial information between countries makes offshore concealment harder.
• Public policy focus – Political pressure is mounting to ensure the wealthy “pay their fair share.”

Together, these mean the risk landscape has fundamentally changed.

How Wealthy Individuals Should Prepare

To protect against unwanted HMRC attention, high-net-worth individuals should:

1. Regularise Tax Affairs – Ensure all tax positions are compliant before litigation or disclosure makes them public.
2. Review Offshore Structures – With increasing international data-sharing, offshore trusts and accounts should be reassessed.
3. Consider Pre-Emptive Disclosure – Voluntary disclosure can significantly reduce penalties and protect against prosecution.
4. Seek Specialist Tax Advice – Proactive planning and compliance checks are essential given HMRC’s sharper enforcement.
5. Be Aware of Litigation Risks – Recognise that disputes, especially divorce or probate, could expose financial details.

With expanded funding, new investigators, and a mandate to increase prosecutions, HMRC is stepping up its scrutiny of wealthy individuals. Civil court proceedings—from divorces to trust disputes—are increasingly becoming a rich source of intelligence for tax investigations. For high-net-worth taxpayers, the message is clear: do not wait for HMRC to uncover irregularities. Once information is public, it may be too late to avoid investigation or prosecution.

The best defence is proactive compliance—regularising tax affairs, reviewing planning strategies, and ensuring that any financial arrangements can withstand scrutiny.

Call to Action

Facing complex tax matters or concerned about HMRC’s increased scrutiny? Our specialist advisors can help you regularise your tax position and protect against investigation.