HMRC does not know how many billionaires pay tax in the UK, MPs claim

Daily Mail​

a day ago

His Majesty's Revenue and Customs is failing to identify how much tax is paid by billionaires, which could have an impact on public spending, according to MPs.
A report by the Public Accounts Committee (PAC) is calling on the tax office to publish its plan for increasing the tax take from wealthy taxpayers both domestically and offshore.
It found HMRC does not use its data to identify wealthy people and publish transparency about how much tax they pay.
There are just a handful of billionaires in the UK, but they have wealth and assets 500 times greater than a person who meets HMRC's definition of 'wealthy'.
Since 2019/20, HMRC has defined wealthy individuals as those with incomes of £200,000 or more, or assets equal to or above £2million, in any of the last three years.
While HMRC has increased the amount of tax revenue from the wealthy - from £2.2billion in 2019/20 to £5.2 billion in 2023/24 - the report found that the tax gaps are 'particularly difficult to measure'.
PAC says HMRC is 'overly confident and optimistic' the wealthy tax gap - the difference between what's owed and what's actually paid - is £1.9 billion, and that an offshore tax gap of £300million seems 'far too low'.
The very wealthiest paid £119billion in personal taxes in the 2023/24 tax year, around £140,000 per person, and made up a quarter of the UK's personal tax receipts.
However, a recent report by the National Audit Office found tax avoidance and evasion could be much higher than previously estimated.
The complexity of wealthy people's tax affairs made it more difficult for HMRC to identify any tax owed, the NAO said.
Lloyd Hatton MP, member of PAC said: 'We already know a great deal about billionaires living in the UK, with much information about their tax affairs and wealth in the public domain.'
However, a recent report by the National Audit Office found tax avoidance and evasion could be much higher than previously estimated.
The complexity of wealthy people's tax affairs made it more difficult for HMRC to identify any tax owed, the NAO said.
'So we were disappointed to find that HMRC, of all organisations, was unable to provide any insight into their tax affairs from its own data - particularly given that any single one of these individuals' contributions could make a significant difference to the overall picture.
'We found a similar apparent lack of curiosity in how wide the tax gap is both for the very wealthy and for wealth stashed away offshore.'
What is PAC calling for?
Among its recommendations, PAC is calling on HMRC to close the tax gap further and publish a plan and timeline for increasing its tax take.
MPs also claim that HMRC cannot identify how much tax is paid by billionaires, despite the relatively small number of individuals involved.
As such, it is calling for a plan to understand how much wealth is held by billionaires using publicly accessible data, like the Sunday Times Rich List.
This would be similar to the US, where its Inland Revenue Service has worked with researchers to link its data with the Forbes 400.
Another one of the committee's recommendations is a review into whether segmenting wealthy customers according to their levels of wealth could help assess risk better.
Currently, wealthy individuals are treated as a single group, but it's understood that the tax office looks at who poses the biggest risk based on all taxable income and gains, rather than wealth alone.
Hatton said: 'Our report shows that, however you slice it, there is a lot of money being left on the table. HMRC must, under its new leadership, begin collecting the correct amount of tax from the very wealthiest - and this must include wealth that is currently squirreled away in tax havens.'
An HMRC spokesperson said: 'The government is determined to make sure everyone pays the tax they owe.
'Extra resources were announced in the recent spending review which allows us to significantly step up our work on closing the tax gap amongst the wealthiest. This includes recruiting an extra 400 officials specialising in the wealthy and offshore tax gap, and increasing prosecutions of those who evade tax.'
The Government has said it plans to crack down on tax-dodging, with the Chancellor vowing to collect over £6billion a year during her first Budget.
In her spring spending review, she increased this amount to £7.5billion, announcing plans to reward informants within businesses that are not complying with the tax regime.