The Public Accounts Committee (PAC) are seeking clarity and understanding after their report revealed HM Revenue and Customs (HMRC) cannot identify how much tax is paid by UK billionaires.

This news will concern Chancellor Rachel Reeves, who will be analysing all financial rates and data ahead of the Autumn Budget. That lack of clarity on current figures paid by UK billionaires could filter down and have a detrimental effect on all taxpayers.

HMRC need to find a solution that will give clarity for all, but without these figures, the Chancellor may be forced down a road where all taxpayers contribute more to fill the gap.

What could this mean for your taxes?

Chancellor Rachel Reeves is thoroughly examining all possible areas to try and fill the £5 billion gap the Government needs to balance its books.

The lack of information available on the UK’s wealthiest people is a major concern, given there is no clear indication of how much they are paying or potentially avoiding.

This leaves Rachel Reeves in a difficult position and could mean taxpayers face the harsh realities of potentially paying more to help fill the gap.

At this stage, it’s difficult to predict but something will have to increase to cover the costs. Make no mistake, it’s very important you understand what you are currently paying and what you could be paying in the near future.

Taxpayers need to know their financial position and have a structured financial plan in place that means they are ready for every eventuality.

Many hope that HMRC can implement a plan where they can extract these figures to ease the pressure on the Government and taxpayers.

What are the PAC’s thoughts on the lack of data?

The PAC are struggling to understand just how and why HMRC cannot provide the figures on tax paid by the UK’s wealthiest.

Following the release of the report, Lloyd Hatton MP, member of the PAC, said, “We already know a great deal about billionaires living in the UK, with much information about their tax affairs and wealth in the public domain.”

“So, we were disappointed to find that HMRC, of all organisations, was unable to provide any insight into their tax affairs from its own data – particularly given that any single one of these individuals’ contributions could make a significant difference to the overall picture.”

What has the PAC recommended to HMRC?

The PAC have asked HMRC to provide clarity as to why elements of the data cannot be verified despite its wide access to internal and external information.

They stress HMRC must do more to explain how the very wealthiest people in the UK contribute to tax revenue and how they can obtain this information to improve their overall reporting.

In its report, the PAC have offered a number of recommendations to HMRC, so they can begin to provide clarity on tax figures surrounding UK billionaires. The list includes the following:

• Inform PAC of immediate actions they can implement straight away.
• Write to the PAC with a structured plan for providing clarity on the figures.
• Compare data available on known billionaires with their own records.
• Steps planned to request data on assets and wealth from taxpayers it suspects may have high or very high levels of wealth.
• The timeframe to implement change to better understand the financial figures and positions between personal wealth and connected entities, including complex trusts and structures.

“Our report shows that, however you slice it, there is a lot of money being left on the table. HMRC must, under its new leadership, begin collecting the correct amount of tax from the very wealthiest,” says Member of the PAC Lloyd Hatton MP.

Now that the PAC have offered their recommendations, it is HMRC’s responsibility to analyse the report and look at implementing initiatives and ideas into their processing to extract the data needed. How long that will take is anyone’s guess at this stage.

What can I do to plan ahead?

It is very important you understand your own financial position and ensure you know how much tax you are currently paying.

As there is so much uncertainty around all aspects of tax and finance, it is vital you can have a plan in place that ensures you can prepare for every eventuality, especially with the Autumn Budget just a few months away.

Having a sound financial plan in place is vital and can give you some relief and flexibility. It is always best to seek financial advice from an accountant who can give you all the tools and support you need.

If you’re looking for expert tax advice and support, get in touch with our team.