HMRC does not know how many billionaires pay tax in the UK or how much they contribute overall to the national tax take, according to a report by the Public Accounts Committee.
MPs from the cross-party committee published a report on Wednesday 16 July that found HMRC does not have the necessary capabilities to properly calculate the tax due by billionaires in the UK and appropriately target wealthy people to pay their fair share.
The committee noted that the commission has recently improved its compliance work and brought in an additional £5.2 billion from wealthy taxpayers in the 2023-24 tax year, a significant increase from £2.2 billion in 2019–20.
However, it also argued this success shows that either non-compliance among the very wealthy has become worse or the extent to which the wealthy were avoiding tax was significantly underestimated by HMRC.
The committee also called HMRC’s efforts to crack down on high-value cases of tax avoidance ‘underwhelming’, stated that just under half of these cases closed with no yield in the 2023-24 tax year, with only 25 people being prosecuted.
If HMRC were to achieve its promised 20% increase in successful prosecutions, this would equate to just five more wealthy taxpayers charged per year.
The report noted that there are vast disparities within the wealthy population and that far more tax could be at risk for billionaires than in cases of non-compliance amongst the general populace.
It argued that HMRC should be far more circumspect in its assessment of the overall level of non-compliance, adding that the commission’s partial estimate of offshore tax evasion at £0.3 billion seems implausibly low given the £849 billion held by UK residents in offshore bank accounts in 2019.
“We see a strong possibility that a much larger pot of revenue has gone uncollected. There is much public interest in the amount of tax the wealthy pay. People need to know everyone pays their fair share,” the report stated.
“We welcome HMRC’s commitment to be more transparent to Parliament and to build trust in the tax system. HMRC has committed to examine opportunities to provide more information on how much tax is paid by the wealthy population and the segments within it.”
The report’s recommendations included requiring HMRC to increase its goal for the number of wealthy taxpayers prosecuted for evading tax each year, and to assess whether it makes sufficient use of available sanctions to crack down on non-compliance by the very wealthy.
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