MPs have criticised the taxman for its lack of detailed information on the super-rich and what they pay, potentially making it harder to impose a wealth tax
HMRC doesn’t know how many billionaires pay tax in the UK – or what they cough-up, MPs have revealed.
This worrying lack of know-how is despite there being relatively few billionaires to keep tabs on, and the huge amounts of money involved, they say. Critics claimed it showed HMRC had “one set of rules for the wealthiest, and another for everyone else.” The Commons Public Accounts Committee, in a report, also flagged a wider problem that could hamper efforts to impose a wealth tax. Former Labour leader Lord Kinnock recently suggested imposing a 2% tax on assets valued above £10million would bring in up to £11billion a year.
Downing Street and senior ministers have refused to rule out the idea as Chancellor Rachel Reeves faces a battle to plug a massive hole in the public finances. Yet efforts could be complicated by the crucially important information HMRC gathers. According to the report: “HMRC has no overview of an individual’s total wealth and faces challenges in getting all the data it needs to risk assess and target wealthy people.”
The committee says the taxman has had some success in cracking down on the rich, including those trying to dodge tax. Through better enforcement of the rules, it collected £5.2billion from the wealthy in the 2023/24 financial year, more than double the £2.2billion in 2019/20. They are defined as individuals with incomes of £200,000 or more, or assets equal to or above £2million, in any of the past three years.
HMRC – whose work collecting tax is vital for funding public services – has around 1,000 in a team dedicated to getting tax from the rich, and has secured funding to take on another 400. But the report says the authority “can and must” do more.
It found HMRC “does not know how many billionaires pay tax in the UK or how much they contribute overall.” Yet the Sunday Times Rich List includes figures in its annual update, recently finding there were 155 billionaires in the UK. The Public Accounts Committee suggests HMRC “immediately start work” comparing available data on known billionaires, including the Rich List, with its own records. It notes they do something similar already in the US, where the Inland Revenue Service worked with researchers to link its data to the Forbes 400 list of the super-rich.
There were also just 25 criminal prosecutions of wealthy people for their tax affairs in 2023/24. Meanwhile, the number of penalties slumped from 1,747 to 456 penalties. Another area of concerns was the so-called tax gap – the difference between what HMRC thinks the wealthy may owe and what it collected. The report questioned whether the estimate of £1.9billion is “over optimistic”. It points to estimates of £300million due from offshore sources, when UK residents held £849billion in offshore accounts in 2019.
The committee recommends HMRC use artificial intelligence to speed up the data gathering process. Lloyd Hatton, a Labour MP member of the committee, said it was crucial for taxpayers to have trust in the system and for the rich to be paying their fair share.
“This report is not concerned with political debate around the redistribution of wealth,” he said. “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.”
Fariya Mohiuddin, interim deputy director at the group Tax Justice UK, said: “If HMRC isn’t able to tax the super-rich fairly, how can anyone have faith in a system that seemingly has one set of rules for the wealthiest, and another for everyone else. At the heart of this story is the urgent need for HMRC to have the resources and political backing for it to be an effective and efficient tax authority that can administer a tax system that is fair and fit for the 21st century.
“With millions waiting for healthcare treatment to essentials being unaffordable for many, HMRC needs to be able to collect the right tax from the super-rich. Failing to do so lets money be squirrelled away into tax havens like some of the British Overseas Territories which deprives our communities, hospitals and schools of the cash they need. he government must give HMRC backing by investing in it for the long-term, to make the system fair, and ensure British tax havens implement transparency measures to prevent offshore hoarding of wealth.”
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.”
They added that large amounts of data was already used to collect the tax that is legally due, relying on multiple sources, including our own records, information that is already in the public domain and detail shared by other countries.