No evidence that family investment companies are used to avoid tax

HMRC has disbanded a special unit that was set up in 2019 to review the use of family investment companies (FICs).

In a report to the wealthy external stakeholders forum HMRC said it found the average assets held FICs amounted to about £5m leading it ‘to conclude that FICS are mainly used by wealthy people’ – it defines these as people who have an annual income exceeding £200 000 or those with wealth of more than £2m. Further analysis showed that the extremely wealthy tended to use family offices to manage their wealth rather than FICs.

In addition the research found ‘no evidence to suggest that there was a correlation between those who establish a FIC structure and non-compliant behaviours’. People used them as a planning strategy ‘often with the primary objective generational wealth transfer and mitigation of inheritance tax’.

The team has...