Recommendations & Conclusions
6 items
18
Conclusion
40th Report - Collecting the right tax …
Deferred
The wealthy team has been generating more of its compliance yield from activities that promote compliance or prevent non-compliance, such as legislative changes, educating agents, and digital prompts within tax software, creating less need for HMRC to open a compliance investigation. HMRC said that by supporting more people to get …
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The wealthy team has been generating more of its compliance yield from activities that promote compliance or prevent non-compliance, such as legislative changes, educating agents, and digital prompts within tax software, creating less need for HMRC to open a compliance investigation. HMRC said that by supporting more people to get their tax right first time it has been able to target its resources on more complex, higher-risk investigations that yield higher levels of compliance yield. It said average returns per case in the wealth team have increased from £34,000 to £94,000.34 The wealthy team has therefore managed to increase the yield from its compliance investigations despite conducting fewer of them.
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Government response AI summary
The government agrees and states HMRC will publish a plan by Spring 2026 detailing how it will improve compliance by the wealthy population and outlining timelines and outcomes.
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HM Treasury
19
Conclusion
40th Report - Collecting the right tax …
Deferred
A significant proportion of the wealthy team’s compliance investigations close with no yield — 46% in 2023–24, though down from 63% in 2022–23.35 We asked HMRC why nearly half of investigations resulted in no yield at all. HMRC explained that it does not know the facts of a case until …
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A significant proportion of the wealthy team’s compliance investigations close with no yield — 46% in 2023–24, though down from 63% in 2022–23.35 We asked HMRC why nearly half of investigations resulted in no yield at all. HMRC explained that it does not know the facts of a case until it opens an inquiry, when it may simply find that everything is lawful and in order. It said its project work, including those focused on a risk in a particular sector, may lead to it opening inquiries into a number of wealthy individuals, only some of whom it may find to be non-compliant. HMRC emphasised that its role is to make sure that the right amount of tax is paid and, if an individual can provide evidence that they have paid the right amount of tax, then it is right that its investigation closes with no yield. HMRC said it would like to reduce the number of cases that close with no yield, but it also does not want its staff to avoid those cases where there is still some uncertainty whether the taxpayer has been compliant or not.36
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Government response AI summary
The government agrees and states that HMRC is currently designing how its investment will be deployed, and will provide more detail to the Committee by Autumn 2026 on how these investments will improve compliance outcomes for the wealthy.
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HM Treasury
21
Conclusion
40th Report - Collecting the right tax …
Deferred
In 2023–24, HMRC initiated compliance investigations in the majority of instances where it identified a risk of non-compliance.39 The average time it took HMRC to close an investigation increased each year over the period from 2018–19 to 2022–23 to a peak of 20 months, before falling to 14 months in …
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In 2023–24, HMRC initiated compliance investigations in the majority of instances where it identified a risk of non-compliance.39 The average time it took HMRC to close an investigation increased each year over the period from 2018–19 to 2022–23 to a peak of 20 months, before falling to 14 months in 2023–24. For investigations which yielded more than £100,000, the average duration has continued to increase and is now 40 months.40 HMRC told us that the average duration of a case can be skewed, depending on which cases close during the year, and that there have been some particularly lengthy, long-running inquiries. It explained that the duration of a case can depend on the willingness of the customer and their agent to share information, and that taxpayers have the right to appeal to a tribunal against HMRC’s requests for information.41
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Government response AI summary
The government agrees with the item but states HMRC will report back on it once its assessment of powers and sanctions is completed by Autumn 2026, deferring any specific action until then.
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HM Treasury
22
Conclusion
40th Report - Collecting the right tax …
Deferred
We asked HMRC about the risk of people under investigation leaving the country, given that some investigations take so long to complete. HMRC conceded that taking too long to complete its complex investigations could present a flight risk but said that its agreements with international partners would mean it could …
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We asked HMRC about the risk of people under investigation leaving the country, given that some investigations take so long to complete. HMRC conceded that taking too long to complete its complex investigations could present a flight risk but said that its agreements with international partners would mean it could pursue anyone who tries to leave the UK.42 HMRC emphasised that it is important that the wealthy team takes on the big cases and should not be deterred from taking on the big cases because they may take longer to resolve.43
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Government response AI summary
The government agrees and will report back on the recommendation by Autumn 2026, pending completion of HMRC's assessment of its application of powers and sanctions.
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HM Treasury
26
Conclusion
40th Report - Collecting the right tax …
Deferred
HMRC is one of few tax administrations that publishes an annual estimate of the amount of tax revenue lost to wealthy individuals. It estimated this wealthy tax gap to be £1.9 billion in 2022–23, or 0.2% of all taxes owed. It uses its estimates as an indicator of its long-term …
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HMRC is one of few tax administrations that publishes an annual estimate of the amount of tax revenue lost to wealthy individuals. It estimated this wealthy tax gap to be £1.9 billion in 2022–23, or 0.2% of all taxes owed. It uses its estimates as an indicator of its long-term performance and to provide insight into where to focus its compliance activity. In October 2024 HMRC published its first estimate of the amount of undeclared tax from income held in offshore accounts, a form of offshore non-compliance. HMRC estimated that, in 2018–19, £300 million in tax was lost due to UK residents failing to disclose their foreign income from some accounts held in the countries which automatically exchanged account information with the UK in 2017 and 2018.49
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Government response AI summary
The government agrees with the item and states HMRC is scoping work to better understand the contribution of wealthy individuals to the tax gap, reviewing current estimates, and will provide an update on progress by Autumn 2026.
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HM Treasury
27
Conclusion
40th Report - Collecting the right tax …
Deferred
We asked HMRC about its confidence in the accuracy of these estimates, observing specifically that the offshore tax gap seems low given that UK taxpayers held £849 billion in foreign accounts in 2019 and reportedly £570 billion in tax havens. HMRC told us that the wealthy and offshore tax gaps …
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We asked HMRC about its confidence in the accuracy of these estimates, observing specifically that the offshore tax gap seems low given that UK taxpayers held £849 billion in foreign accounts in 2019 and reportedly £570 billion in tax havens. HMRC told us that the wealthy and offshore tax gaps are particularly difficult to measure. It said it aims to be as comprehensive as possible and look across all tax types and behaviours in producing and refining estimates but there are inherent challenges.50 HMRC was clear that its estimate of the offshore tax gap is just a partial estimate and does not represent the totality of the offshore tax gap.51 It told us that it wants to expand the coverage and availability of the data to improve the quality of the estimate. Internally, HMRC has identified a much larger amount at risk from all forms of offshore non-compliance. We welcome the Permanent Secretary’s willingness to engage further with us on plans to improve transparency and the accuracy of the tax gap estimates.52 48 Qq 38, 119 49 C&AG’s Report, paras 2.2, 2.20 50 Qq 80-83, 110-111 51 Qq 113-114 52 Q 116 17
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Government response AI summary
The government agrees with the item and states HMRC is scoping work to better understand the contribution of wealthy individuals to the tax gap, reviewing current estimates, and will provide an update on progress by Autumn 2026.
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HM Treasury