Latest news with #LloydHatton
Telegraph
a day ago
- Business
- Telegraph
HMRC doesn't know how many billionaires pay tax in UK, say MPs
HM Revenue and Customs (HMRC) does not know how many billionaires pay tax in the UK, a report by MPs has found. The Public Accounts Committee (PAC), which scrutinises government spending, said an unknown but likely sizeable amount of wealth was being hidden from the tax office through legal loopholes and offshore bank accounts – despite a recent crackdown by officials. When asked by MPs, HMRC was unable to provide a figure for how much revenue it collects from British billionaires, or how many billionaires paid tax in the UK. The report's findings suggest it could be difficult for Labour to impose wealth taxes on the very richest in society. Lloyd Hatton, a Labour MP and member of the PAC, told The Telegraph that closing the so-called 'tax gap' – the difference between the amount of tax that should be paid and the amount actually paid – would offer an alternative to introducing new wealth taxes. Mr Hatton said: 'Rather than the Treasury trying to drum up new taxes, if we just got this right and closed the tax gaps there would be more money to spend on public services.' The report said HMRC's estimate that it failed to collect £300m last year from offshore accounts was too low, given UK residents held £849bn in tax havens in 2019. Mr Hatton described the estimate as 'completely inconclusive and in no way reflective of what the offshore tax gap is'. He believes the true figure is far higher. He said: 'HMRC is unable to tell us how much tax the very wealthiest in the country – billionaires – are paying the UK. I find it really troubling that HMRC does not conduct that analysis. 'If we don't have that information it's really hard to close the wealthy tax gap and make sure we are collecting the right amount of tax and those with the broadest shoulders are paying their fare share.' Effectively taxing the rich could raise 'billions of pounds of tax', Mr Hatton said. He added that the PAC report did not look at the 'merits of any individual wealth tax policy or indeed how HMRC would implement a wealth tax'. 'What we're looking at is how we collect the right amount of tax from wealthy individuals living in the UK,' he said. The population of wealthy taxpayers – who have at least £2m in assets or an income of £200,000 a year – has risen from 700,000 between 2019 and 2020 to 850,000 last year. HMRC told the PAC it did not hold more detailed figures that would reveal the number of people in this category with the largest incomes and assets, including billionaires. The report comes after Labour refused to rule out wealth taxes to fund a series of about-turns on planned cuts to public spending that could result in higher taxes in the Budget later this year. The latest decision to reverse reductions in benefits payments will cost £3bn, according to a forecast by the Institute for Fiscal Studies think tank. Allowing pensioners with an annual income of less than £35,000 to keep the winter fuel payment is predicted to come with a price tag of more than £1bn. One suggestion by Lord Kinnock, the former Labour leader, is a 2pc tax on assets worth more than £10m that could help raise about £10bn a year for the Treasury. He said the party was 'willing to explore' the measure. But HMRC is already struggling to collect enough taxes from those who would fall into this category, according to the PAC report. It said the tax office found it 'particularly difficult' to measure the unpaid taxes of the wealthiest and those with money hidden in offshore accounts. The UK is also poised to lose more millionaires than any other country this year amid high taxes, making the pool of potential wealthy taxpayers smaller. Figures from advisory firm Henley & Partners predicted last month that a net 16,500 millionaires would quit Britain in 2025, up from 10,800 last year. It would be the largest wealth exodus of its kind in any country for a decade. MPs praised a recent crackdown on uncollected taxes that saw the tax office net £5.2bn from wealthy individuals last year, up from £2.2bn between 2019 and 2020, but said it suggested tax avoidance was growing. The PAC report said: 'The scale of this success suggests either non-compliance amongst the wealthy has got worse, or that previous estimates of the extent to which they were avoiding tax were too low.' HMRC aims to increase revenues from offshore taxes by at least £500m by the end of the decade and plans to hire 400 additional staff specifically to target the increasing number of wealthy taxpayers. The PAC asked HMRC to provide a plan for how it intends to better its understanding of the wealth held by billionaires in the UK. It suggested officials target those named on the Sunday Times Rich List, a yearly publication of the wealthiest people in the country. The committee recommended HMRC do this by following the example of the Inland Revenue Service, its American equivalent, by linking tax data to the Forbes 400, which lists the richest people in the United States. An HMRC spokesman 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.'
STV News
a day ago
- Business
- STV News
HMRC does not know how many billionaires pay tax in UK
HM Revenue and Customs (HMRC) cannot identify how much tax is paid by UK billionaires, despite the relatively small number of individuals and significant sums of money involved, according to a report. The Public Accounts Committee (PAC) said that HMRC 'can and must' do more to understand and explain the contribution that the very wealthiest in society make to tax revenue. 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 £2m, 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 £1.9bn. Its partial estimate of the offshore tax gap, of £0.3bn, seems far too low, particularly when compared with UK residents holding £849bn 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 £5.2bn in 2023-24, up from £2.2bn 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 £10m, 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. Get all the latest news from around the country Follow STV News Scan the QR code on your mobile device for all the latest news from around the country
Yahoo
a day ago
- Business
- Yahoo
HMRC 'doesn't know' how many billionaires pay tax in the UK
HM Revenue and Customs does not know how many billionaires pay tax in the UK, according to a new report by MPs. The Public Accounts Committee says this is despite the fact only a small number of people have this status - and the significant sums of money involved. HMRC has been told it "can and must" do more to understand how much the very wealthiest in society contribute to the public purse, as "there is a lot of money being left on the table". Artificial intelligence and The Sunday Times Rich List were identified as two ways of getting a clearer picture. The taxman is facing calls to reveal how it plans to increase contributions from billionaires both domestically and offshore, amid a squeeze in the public finances. MPs added: "There is much public interest in the amount of tax the wealthy pay. People need to know everyone pays their fair share." The report pointed to the US, where the Internal Revenue Service links its data to the Forbes 400 list of rich Americans. PAC member Lloyd Hatton added: "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." Read more money news: Mr Hatton added that the committee was "disappointed" that HMRC could not offer any insights into the tax arrangements of billionaires from its own data - as "any single one of these individuals' contributions could make a significant difference to the overall picture". At present, about 1,000 people within HMRC are focused on the tax affairs of the UK's wealthiest, but funding has been secured to increase this headcount by 400 - with a view to "increasing prosecutions of those who evade tax". A spokesperson added: "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 among the wealthiest."
Sky News
a day ago
- Business
- Sky News
HMRC 'doesn't know' how many billionaires pay tax in the UK
HM Revenue and Customs does not know how many billionaires pay tax in the UK, according to a new report by MPs. The Public Accounts Committee says this is despite the fact only a small number of people have this status - and the significant sums of money involved. HMRC has been told it "can and must" do more to understand how much the very wealthiest in society contribute to the public purse, as "there is a lot of money being left on the table". 6:36 Artificial intelligence and The Sunday Times Rich List were identified as two ways of getting a clearer picture. The taxman is facing calls to reveal how it plans to increase contributions from billionaires both domestically and offshore, amid a squeeze in the public finances. MPs added: "There is much public interest in the amount of tax the wealthy pay. People need to know everyone pays their fair share." The report pointed to the US, where the Internal Revenue Service links its data to the Forbes 400 list of rich Americans. PAC member Lloyd Hatton added: "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." 1:16 Mr Hatton added that the committee was "disappointed" that HMRC could not offer any insights into the tax arrangements of billionaires from its own data - as "any single one of these individuals' contributions could make a significant difference to the overall picture". At present, about 1,000 people within HMRC are focused on the tax affairs of the UK's wealthiest, but funding has been secured to increase this headcount by 400 - with a view to "increasing prosecutions of those who evade tax". A spokesperson added: "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 among the wealthiest."
South Wales Guardian
a day ago
- Business
- South Wales Guardian
HMRC does not know how many billionaires pay tax in UK
The Public Accounts Committee (PAC) said that HMRC 'can and must' do more to understand and explain the contribution that the very wealthiest in society make to tax revenue. 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.
