Source · Select Committees · Public Accounts Committee
Recommendation 11
11
Accepted
HMRC acknowledges the need to review its wealthy population definition and improve segmentation.
Recommendation
We asked HMRC whether it would be useful if it segmented the population of wealthy individuals to focus on the very wealthiest taxpayers, and whether it saw different risks from these wealthiest individuals.16 HMRC observed that people’s propensity for risk will vary and that it sees a lot of risk at lower wealth bands, not just from billionaires. HMRC stressed the importance 11 Q 11 12 Q 13 13 Q 77 14 Q 77 15 C&AG’s Report, paras 1, 10, 1.17 16 Qq 26, 50 10 of having a risk model that considers other factors besides pure wealth, such as complexity and opportunity for non-compliance. It said it otherwise might miss those people who are causing more harm to the tax system than just the very wealthy. It compared a very wealthy individual, earning a lot of income through Pay As You Earn and therefore highly visible to HMRC, to another individual with much lower wealth who places properties in very complex offshore trusts and structures which may be indicative of non-compliant behaviour.17 Nevertheless, HMRC acknowledged that it needs to keep its definition of the wealthy population under review and accepted that the case for better segmentation was well made.18
Government Response Summary
HMRC will undertake further analysis to enhance its understanding of how different levels of wealth and complexity impact risk in the wealthy population, to improve its identification and targeting of risk. Target implementation date: Autumn 2026.
Government Response
Accepted
HM Government
Accepted
2a. PAC recommendation: As part of its plan for increasing yield from wealthy taxpayers domestically and offshore, HMRC should review whether segmenting its wealthy customer group according to different levels of wealth and complexity would help it to assess and then target the most significant risks. 2.1 The government agrees with the Committee’s recommendation. Target Implementation date: Autumn 2026 2.2 The government notes the Committee’s conclusion. HMRC currently segments the wealthy population using a range of risk factors including estimated wealth and complexity. 2.3 HMRC will undertake further analysis to enhance its understanding of how different levels of wealth and complexity impact risk in this population and so improve its identification and targeting of risk.