"HMRC [Her Majesty’s Revenue and Customs (HMRC)] lack of transparency has eroded public trust in a fair tax system and makes it more difficult for the department to explain what it does well … HMRC could not explain why income tax receipts from high net worth individuals has fallen by 1 billion pounds ($1.25 billion, or 20 percent), while income tax from all taxpayers has increased by 23 billion pounds over the same period," the report of the lower chamber's committee said.
The parliament committee said that not only were wealthy individuals not required to present a full record of their expenses, HMRC provided each of these 6,500 Britons with a "customer relationship manager," a practice which risks sending the "wrong message to other taxpayers about extra help being available to the wealthy."
In the five years to March 2016, HMCR complete only 72 of these investigations, with only two criminal investigations leading to one prosecution, the reported noted. The revenue service also has a "dismal" penalty system for tax fraud cases.
"Since 2012, HMRC has issued 850 penalties totalling £9 million to high net worth individuals; an average penalty of £10,500. That seems too small an amount to change the behaviour of multi-millionaires," the report stressed.
To crackdown on tax evasion and fraud among this group of taxpayers, the parliament committee called on HMRC to be completely transparent with their work, address the ambiguity surrounding the role of the customer relationship managers, and better its methods of monitoring wealthy individuals’ assets the tax receipts.
