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The extent of tax evasion and escape by rich people could be much higher than the British tax authority before thought previously, revealed a report of the National Audit Office.
The rich, defined by HM Revenue & Customs as those who earn more than £ 200,000 per year, with assets of more than 2 million pounds sterling, paid 119 billion pounds sterling in personal taxes in 2023-24, on average £ 140,000 per person. The sum represented 25% of personal tax revenues from the United Kingdom.
But the complexity of the affairs of most of the wealthy made it more difficult for the HMRC to identify the tax they had and presented them deliberately to avoid paying the correct amount, warned the Na report Friday.
The report indicates that in 2022 to 23, the HMRC estimate of “the tax gap” among this cohort – the difference between the amount of the tax which should be paid and what was really paid – had been only 1.9 billion pounds sterling.
However, he noted that the HMRC had subsequently doubled the annual “return on compliance” of people rich by 2.2 billion pounds sterling in 2019-20 to 5.2 billion sterling pounds in 2023-24. The term refers to the tax revenues that HMRC has collected because of its work to guarantee compliance.
The figures have shown that the HMRC had collected more tax than it had thought of it as possible, according to the report.
Nao’s report said: “This raises the possibility that the underlying non-compliance levels among the rich population can be much more important than what thought it previously.”
Despite the growth of the population of rich people, the number of criminal prosecution on unpaid tax penalties and the HMRC issued to rich people had decreased in recent years, added the report.
Gareth Davies, head of the NAO, said the HMRC deserves the merit of having considerably increased additional tax revenues that his compliance work had provided wealthy taxpayers.
But he added: “This may indicate that the levels of non-compliance are higher than that previously estimated. The HMRC should also seek to ensure greater transparency to give greater confidence to the public than all taxpayers contribute to their right.”
The report also addressed the problems concerning tax evasion and avoidance by rich people with assets abroad, which, according to the NAO, had recognized as a key risk.
The report indicates that HMRC public estimate The fact that 300 million pounds sterling in tax revenue was lost through this path in 2018-2019, the last year available, did not fully capture the amount of the loss of potential tax.
The report pointed out that British tax residents held 849 billion pounds sterling in offshore accounts in 2019. It added: “Internally, HMRC has identified a much greater amount at risk of all forms of offshore non-compliance, but it does not publish this figure.”
Meanwhile, the tax office had only established a “limited strategy” to combat tax evasion and avoidance by rich people, said the NAO.
In the fall budget, the government finance For additional compliance staff of 5,500 hmrc over the next five years, noted the report. However, he said that the tax office did not yet have a clear plan to ensure that the team had the qualified personnel he needed.
Among several recommendations, the report called on the HMRC to develop a “strategic vision and a clear plan” to combat the rich non-compliance and ensure “sufficient transparency to give greater confidence” to the public.
Caitlin Boswell, head of advocacy and policies at Tax Justice UK, a campaign group, noted the growing gap between taxes due by the richest and what was really paid.
“It is because of things like secret offshore tax havens used to hide assets whose tax authority has no surveillance,” she said.
She also blamed the problem of using tax agents by the rich to exploit “gaps in the system”.
HMRC said it was his duty to ensure that everyone paid the right tax under the law, “regardless of wealth or status”.
He added: “The government offers the most ambitious package to fill the tax gap and bring in an additional 7.5 billion pounds for public services per year by 2029-30.”
