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UK tax authorities don’t know how much tax a billionaire will pay. The government considers closing the country’s growing fiscal hole for collection of the country’s wealthiest individuals, which is a powerful group of cross-party lawmakers found.
“HM Revenue & Customs has no overview of individual wealth and faces challenges in obtaining all the data needed to evaluate and target wealthy people,” according to a report by the House of Representatives Public Accounts Committee.
“I think you know how many billionaires there are, I don’t think HMRC knows what taxes they are currently paying as a cohort,” said Lloyd Hutton, a Labour MP and member of the committee.
Hatton added that HMRC’s estimates of the “wealthy tax gap” and “offshore tax gap” make the difference between the money collected and the money collected “severely inaccurate” by billions of pounds.
“We’re talking about a lot of money that can be invested in public services,” he said, “This makes a real difference if you do it right.”
The report, released Wednesday, congratulated HMRC on raising £5.2 billion from wealthy individuals from 2023-24.
The Labour Government is keeping the door open to higher taxes on wealthy people to close the growing fiscal deficit as the Treasury promises to “protect workers” ahead of the fall budget.
Wealth taxes will follow budgetary measures aimed at the wealthy in October last year. This includes the abolition of non-dominant regimes and changes to agricultural and business property relief.
Last week, a spokesman for Kielstarmer said:
Report recommendations include that HMRC must use artificial intelligence (AI) to analyze data and utilize public information such as the Sunday Times Rich list to create a more complete profile of individual wealth.
Hutton said the US Inland Income Services is already using the Forbes 400 list of billionaires in its research. However, the accuracy and inclusiveness of such lists is contested on the basis of the often private and inseparable financial arrangements of wealthy people.
The report criticized the sharp decline in penalties that had been applied to wealthy individuals from 1,750 in 2022-23 to 2023-24, and said authorities said it would increase both penalties and prosecutions.
“As the recent spending review has announced additional resources, we can significantly strengthen our work to bridge the tax gap among the wealthiest people,” HMRC said.
“This includes recruiting an additional 400 officials specialized in wealthy and offshore tax disparities and increasing prosecutions of people who avoid taxes,” he added.
The wealthy UK person is defined as having assets of £200,000 or £2 million over the past three years.
Phineas Hirsch, a lawyer at Payne Hicks Beach, said in 2017 that global tax authorities already have access to data on offshore wealth, taking into account the introduction of general reporting standards.
“It is inevitable that AI will speed up ‘dot participation’ and allow tax authorities to process information received on foreign assets,” he said.
