HMRC have identified possible tax avoidance and evasion worth nearly £2bn. A National Audit Office report revealed that they have so far only pursued one criminal prosecution successfully. Only two people have been criminally investigated over the past 5 years, which have led to the single prosecution. Another 70 cases were pursued through civil courts.
Chair of the public accounts committee, Meg Hilier said that the findings would only prompt further attention to be directed to HMRC’s treatment of the super-rich.
She said: “this very low prosecution rate highlights the concern that high net worth individuals and their tax advisers are always one step ahead of HMRC. We will be questioning HMRC about the level of prosecutions and whether it is stepping up to the plate.”
Over the past five years, HMRC has investigated and closed 72 cases against wealthy individuals. Seventy were investigated with civil powers, leading to £80m in compliance yield including penalties.
Head of the National Audit Office, Amyas Morse said: “the tax affairs of the wealthiest in society are complex, making it harder for HMRC to ensure that they are paying the right amount of tax. HMRC’s specialist team gives it a better understanding of the tax affairs and behaviours of these taxpayers.
“While the yields from HMRC’s work in this area have increased, it needs to evaluate what approaches are the most effective and to understand the outcomes it achieves.”
HMRC set up a specialist unit in 2009 after criticisms that it was failing to pursue wealthy taxpayers. Each wealthy individual is assigned a “customer relationship manager”.
When one of these wealthy individuals is suspected of tax fraud then their cases is passed to a team which will then examine whether they merit a criminal or civil investigation. About 4,000 inquiries have been open over the past 3 years.
The tax affairs of 6,500 super-rich individuals have been investigated by this unit in relation to outstanding receipts worth £1.9bn. Of these receipts, the majority have been associated with aggressive avoidance schemes.
HMRC estimates that around £1.1bn of the £1.9bn is linked to tax avoidance schemes. The tax authority also predicts that 15% of the wealthiest have used at least one tax avoidance scheme at some point.
HMRC point out that they are impartial and only last year tracked down £416m in tax from the wealthiest that would have been unpaid if not for their work.
A spokesperson for HMRC said: “We will continue to evaluate our results so that we carry on getting what is due to the country.
“The NAO’s report recognises that taxing the wealthy is complex but also commends HMRC’s approach as both sensible and in line with OECD best practice advice.”
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