HMRC doesn’t know how many billionaires are in Britain
HMRC does not know how many billionaires pay tax in the UK or how much they contribute, a group of MPs have warned, despite the outsized share of tax revenues they contribute, piling yet more scrutiny on the feasibility of a blanket wealth tax.
In a report examining how to tax wealthy individuals, the Public Accounts Committee (PAC) censured HMRC over its loose grasp of billionaire wealth in Britain, saying it “can and must do more to understand the contribution” the cohort makes to the public finances.
As part of the paper, lawmakers on the PAC suggested HMRC leverage publicly available data on ultra-high net worth individuals, like The Sunday Times Rich List, and use AI tools to get a handle on the UK’s wealthiest residents.
PAC member Lloyd Hatton 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.
“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.”
The cross-party group of MPs also rapped the UK’s customs authority for the fact it had not issued any penalties for enablers of tax evasion despite the it acknowledging the role of “unscrupulous advisers” during its evidence.
It recommended HMRC officials to whether the body was using the sanctions available to it efficiently, after the paper found prosecutions handed out by HMRC to wealthy people had plunged from 1,747 to 456.
Hatton added: “There is certainly room for improvement. We hope that HMRC uses both our recommendations and the new funding it has secured in this area to do so.”
Wealth tax under scrutiny
The report supports recent scrutiny on the practical feasibility of a national wealth tax after it gained momentum in some political circles as a way for the Chancellor to plug a multibillion pound fiscal gap at her upcoming Budget.
The government has on several occasions refused to rule out introducing a blanket tax on wealth above £10m, despite experts and economists warning its practical roll-out would be incredibly difficult and unlikely to generate much revenue.
Andy Summers, associate professor at the London School of Economics, told Bloomberg that a wealth tax “can’t be done” unless the Treasury had been working on one for years, as the government has no means of monitoring residents’ overall wealth.
A spokeswoman for HMRC 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.”