HM Revenue and Customs does not know how much tax is paid by the UK’s 156 billionaires, despite the large sums of money likely involved, according to a critical report from the Public Accounts Committee (PAC).
The report found that HMRC "does not know how many billionaires pay tax in the UK or how much they contribute," revealing a serious lack of information about the taxes paid by the country's richest individuals.
MPs on the committee said HMRC "can and must" do more to track and explain how much the wealthiest contribute to public finances.
They added that the public has a right to know whether the richest people are paying their fair share of tax.
PA | Possible uses of AI could include sifting large amounts of data and suggesting what information is missing from tax returns
The PAC has suggested that HMRC should use The Sunday Times Rich List and artificial intelligence to gain deeper insights into wealth and assets.
The committee's report highlighted that in the United States, the Internal Revenue Service has worked with researchers to link its data to The Forbes 400.
The report said: "We think there is scope for HMRC to use artificial intelligence (AI) to better exploit and analyse data and, in this way, improve its risk assessment and targeting of wealthy individuals."
Possible uses of AI could include sifting large amounts of data and suggesting what information is missing from tax returns.
HMRC currently defines wealthy individuals as those with incomes of £200,000 or more, or assets equal to or above £2 million, in any of the past three years.
The tax authority told the inquiry that the tax gaps - the difference between taxes theoretically owed and those actually paid - for wealthy people and for offshore wealth are particularly difficult to measure.
The PAC expressed concern that HMRC is overly confident in its estimate that the wealthy tax gap is £1.9 billion.
The committee said its partial estimate of the offshore tax gap, of £0.3 billion, seems far too low, particularly when compared with UK residents holding £849 billion in offshore accounts in 2019.
GETTY | HMRC 'doesn't know' how many billionaires pay tax in UK
HMRC says it only collects the data needed to administer the tax system as required by UK tax legislation.
PAC member Lloyd Hatton said: "This report is not concerned with political debate around the redistribution of wealth. Our committee's role is to help HMRC do its job properly ensuring wealthy people pay the correct tax."
He acknowledged that "HMRC does deserve some great credit for securing billions more in the tax take from the wealthiest in recent years," but warned "there is still a very long way to go before we can reach a true accounting of what is owed."
Hatton added that the committee was "disappointed" that HMRC could not offer any insights into the tax arrangements of billionaires from its own data - as "any single one of these individuals' contributions could make a significant difference to the overall picture".
GETTY | HMRC plans to recruit an extra 400 officials specialising in the wealthy and offshore tax gap
At present, about 1,000 people within HMRC are focused on the tax affairs of the UK's wealthiest, but funding has been secured to increase this headcount by 400 - with a view to "increasing prosecutions of those who evade tax".
An HMRC spokesperson responded: "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."
HMRC plans to recruit an extra 400 officials specialising in the wealthy and offshore tax gap.