Source · Select Committees · Public Accounts Committee
Recommendation 6
6
Accepted
HMRC lacks sufficient clarity on wealthy individuals' tax payments and avoidance, with overly optimistic tax gap estimates.
Conclusion
It is not sufficiently clear how much tax is paid, and how much tax is avoided by the very wealthy, which restricts HMRC’s ability to reassure the public that it administers the system fairly. Fairness is at the heart of HMRC’s charter. It is important for confidence and trust in HMRC, which has been decreasing in recent years, that the public know the wealthiest are paying their fair share. We welcome the new Permanent Secretary’s commitment to improving trust in the tax system, including examining opportunities to provide greater transparency regarding the 6 amount of tax wealthy taxpayers pay and the contributions of different segments within the wealthy population. HMRC also needs to improve its assessment of the amount of tax that the wealthy avoid paying. HMRC says that the wealthy and offshore tax gaps are particularly difficult to measure. Given these difficulties, and the deficiencies in HMRC’s information on wealth, we are concerned that HMRC is overly confident and optimistic in its estimate that the wealthy tax gap is only £1.9 billion. 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
Government Response Summary
The government agrees and states HMRC is scoping work to better understand and more accurately capture the contribution of wealthy individuals and their controlled entities to the overall tax gap. HMRC will write to the Committee in Autumn 2026 with an update on progress in improving the wealthy tax gap estimate.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. individuals to the overall tax gap and is committed to improving its tax gap estimates. Understanding the tax risks linked with wealthy individuals presents challenges, given the complexity of their tax affairs, which may present additional opportunities for non-compliance. As part of its ongoing analytical work, HMRC is scoping work to better understand the contribution of wealthy individuals and the entities they control to the overall tax gap. This will involve reviewing the scope of current estimates to determine whether and how the contribution of wealthy individuals and their controlled entities can be more accurately captured. HMRC will write to the Committee in Autumn 2026 updating on its progress in improving the estimate of the wealthy tax gap.