Latest news with #InlandRevenueService
The Independent
4 days ago
- Business
- The Independent
MPs baffled as HMRC unsure how many billionaires pay tax in UK
A new report reveals HM Revenue and Customs (HMRC) cannot identify how much tax UK billionaires pay, despite the small number of individuals and vast sums involved. The Public Accounts Committee (PAC) stated HMRC "can and must" do more to understand and explain the tax contribution made by the nation's wealthiest. Its report on collecting the right tax from wealthy individuals said: 'HMRC does not know how many billionaires pay tax in the UK or how much they contribute overall.' It highlighted The Sunday Times Rich List and artificial intelligence (AI) as ways that the revenue body could dig deeper into wealth and assets. The PAC is calling for the revenue body to publish its plan for increasing tax yield from wealthy taxpayers both domestically and offshore. It said HMRC does not collect information on taxpayers' wealth and says that it only collects the data needed to administer the tax system as required by UK tax legislation. The report said: 'There is much public interest in the amount of tax the wealthy pay. 'People need to know everyone pays their fair share.' HMRC's plan for improving its understanding of the wealth and assets held by billionaires could include how it might immediately start work on comparing available data on known billionaires, such as The Sunday Times Rich List, with its own records, the report suggested. In the United States, the Inland Revenue Service has worked with researchers to link its data to The Forbes 400, the report said. There is 'much more' that HMRC can do to improve its work to risk assess and target wealthy people, in particular through the use of data and technology and recruiting wealth management experts, it added. It said: 'We think there is scope for HMRC to use artificial intelligence (AI) to better exploit and analyse data and, in this way, improve its risk assessment and targeting of wealthy individuals. 'Possible uses of AI to speed up the system include sifting large amounts of data and suggesting what information is missing from tax returns.' The tax authority told the inquiry that the tax gaps – the difference between taxes theoretically owed and those actually paid – for wealthy people and for offshore wealth are particularly difficult to measure. Since 2019-20, HMRC defines wealthy individuals as those with incomes of £200,000 or more, or assets equal to or above £2 million, in any of the past three years. The PAC said it is concerned that HMRC is overly confident and optimistic in its estimate that the wealthy tax gap is £1.9 billion. Its partial estimate of the offshore tax gap, of £0.3 billion, seems far too low, particularly when compared with UK residents holding £849 billion in offshore accounts in 2019, the committee said. PAC member Lloyd Hatton said: 'This report is not concerned with political debate around the redistribution of wealth. 'Our committee's role is to help HMRC do its job properly ensuring wealthy people pay the correct tax. 'While HMRC does deserve some great credit for securing billions more in the tax take from the wealthiest in recent years, there is still a very long way to go before we can reach a true accounting of what is owed. '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. '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. '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 squirrelled away in tax havens. 'There is certainly room for improvement.' The yield from HMRC's compliance work with wealthy individuals has more than doubled in recent years, with it collecting £5.2 billion in 2023-24, up from £2.2 billion in 2019-20. But the report said: 'The scale of this success suggests either non-compliance among the wealthy has got worse, or that previous estimates of the extent to which they were avoiding tax were too low.' HMRC has identified opportunities that will help it close the tax gap. There are currently around 1,000 people in the wealthy team, and HMRC has secured funding for another 400 staff, the report said. The population of wealthy taxpayers that HMRC's wealthy team administers is growing, up from 700,000 individuals in 2019-20 to 850,000 individuals in 2023-24, it added. HMRC treats wealthy people as one single group and says it finds some billionaires have quite straightforward tax planning, while some millionaires with much lower wealth will have set up very complex offshore trusts and structures, the committee said. The revenue body deploys customer compliance managers according to taxpayers who pose the most risk and says managers typically end up working on cases relating to individuals with wealth above £10 million, it added. The committee recommended that HMRC should review whether segmenting its wealthy customer group according to different levels of wealth and complexity would help it to assess and then target the most significant risks. HMRC should also write to the committee to explain how confirmed funding to date will feed through to better compliance performance, and what it expects to achieve from future investment, the committee said. It added that a lack of penalties issued to enablers of tax evasion is 'particularly disappointing' despite unscrupulous advisers often playing a key role in helping the wealthy evade tax. HMRC should assess whether it is using its powers to tackle non-compliance by the wealthy sufficiently, in particular, whether it makes enough use of available sanctions, the report said. 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.' HMRC assesses the wealthy population according to who poses the biggest risk based on all taxable income and gains, rather than wealth alone.
Business Recorder
30-04-2025
- Business
- Business Recorder
Probationary officers of IRS visit FBR
ISLAMABAD: The probationary officers of the Inland Revenue Service (IRS) from the 51st Specialized Training Program (STP) visited the Federal Board of Revenue (FBR) Headquarters, marking the commencement of their field postings. The on-service training cohort comprises 42 officers. Upon their arrival, the officers were received by senior officials of the FBR and were escorted to the Skylight Arena for a formal briefing session. The session was chaired by Chairman FBR, Rashid Mahmood Langrial, and was attended by Member Inland Revenue (Operations), Dr Hamid Ateeq Sarwar, along with other senior officers of the Revenue Division. During the interaction, Chairman FBR welcomed the probationary officers and engaged them in a dialogue to obtain their perspectives on the structure, functions, and operational challenges of the organization. He attentively listened to their observations regarding their field experiences and appreciated their proactive engagement and interest in revenue mobilization efforts. The officers, in turn, expressed keen interest in understanding the institutional framework of FBR and raised insightful questions on tax policy and administration. Copyright Business Recorder, 2025
The Independent
04-03-2025
- Business
- The Independent
The unintended consequence of Trump's tariffs that will affect us all
Trump 2.0 is different. He is better organised and has his people in place to deliver his agenda – including all his most destructive impulses. Hence the imposition of tariffs on Canada and Mexico (25 per cent) after a month's suspension with an additional levy on China (bringing the total to 20 per cent). These are paid by importers at ports and the border. The theory is the that levies protect domestic industries. In practice, it's not so simple. Is it ever? Let's take Canada. The duties imposed on its produce don't just hit its most famous export – the maple syrup represented on the famous flag – they also apply to energy. Canada supplies roughly 58 per cent of energy-hungry America 's hydrocarbon imports and 60 per cent of its crude oil imports. Canada is a good supplier for the US because it is next door and is (was) a reliable ally. The inevitable result of this is that America's energy will become more expensive. Businesses have two choices when faced with increased costs: they can absorb them, or they can pass on the increase to the end consumer – the average American. Their preferred option will be the latter. This doesn't mean that, for example, the price of the Canadian maple syrup Americans buy will shoot up by 25 per cent. But it will likely shoot up. Rising energy costs, meanwhile, have a nasty habit of stoking inflation across an economy. Britons, in hock to the global wholesale natural gas market for electricity, are keenly aware of this fact. Then there is lumber: Canada's is in high demand in those parts of the US which are rebuilding after natural catastrophes. This is not a commodity whose price you want to increase.. A big reason for the success of Trump and the Republicans at the US ballot box was the impact of inflation on the American consumer. Singled out for particular criticism was Joe Biden's Inflation Reduction Act. This huge piece of legislation pumped billions of dollars into clean energy. It also included Affordable Care Act subsidies and expanded America's Inland Revenue Service to improve tax collection. But it didn't actually do much to reverse inflation, at least in the short-term. Some critics argued that such a fiscal expansion did the opposite. There is no debate about tariffs. They do increase inflation and we all know what central banks do when confronted with that: they hike interest rates, hurting both domestic and business borrowers and slowing economic growth. America's reputation as a good trade partner will also take a knock, with trade flows potentially being diverted away from it. There is some evidence that this happened last time around. It is true that while tariffs can protect some industries, they damage others – not just those that import raw materials from the victims but exporters, too, because of the inevitable response. Affected countries tend to hit back with tariffs of their own, as they have done in this case. A global trade war is the last thing a world economy, battered by a series of black swan events, needs. But here it is, sparking a global stock market rout. Trump's secondary aim with the policy is to raise revenues. America's debt now sits at 124 per cent of GDP. By comparison, Britain's is just over 95 per cent. Last week saw a massive spending bill passing the US House on party lines, with the lone exception of Thomas Massie of Kentucky. The Republican congressman is a prominent fiscal hawk. For all Elon Musk's posturing at the Department of Government Efficiency (DOGE), America is not cutting enough to avoid the legislation vastly increasing its debt pile. There could scarcely be a more destructive way of raising revenues to tackle that problem than imposing tariffs.
