HMRC warned to toughen up on the super-rich over tax

HM Revenue and Customs is giving preferential treatment to Britain’s wealthiest and failing to follow up on outstanding tax bills properly, the Public Accounts Committee (PAC) has claimed.

In 2009, a specialist HMRC unit was created to bring in more money from the super-rich (who have more than £20m), with approximately 6,500 high net-worth people in the UK in 2015-16.

Since 2009, the amount of income tax paid by high net-worth individuals has fallen £1bn, while there has been a £23bn total increase in income tax receipts for the whole public during the same period. An additional £2bn was collected in tax from these wealthy individuals, but the fall in their income tax payments has caused confusion among authorities.

Parliament’s spending watchdog released a critical report covering the specialist HMRC unit, writing: “We were not convinced by [HMRC’s] assertion that there is a clear line between giving its view on potential transactions and giving tax advice and we don’t think there is enough clarity about what customer relationship managers can and cannot do.”

Labour MP Meg Hillier, chairwoman of the PAC, said: “Cosy terms such as ‘customer relationship manager’ and HMRC’s reluctance to be open add to the picture of arrangements that, while beyond the reach of ordinary taxpayers, are also ill-suited to the increasingly sophisticated methods the super-rich can use to reduce the tax they pay.

“If the public are to have faith in the tax system then it must be seen to have fairness at its heart. It also needs to work properly. In our view, HMRC is failing on both counts.”

There were also concerns over the activities of some top footballers and entertainers, who could be abusing the system with regards to image rights in order to reduce their tax liabilities.