Wealthy may be avoiding more tax than thought, watchdog warns after drop in penalties

Wealthy individuals in Britain could be avoiding more tax than thought, the government's spending watchdog has warned, after a dramatic fall in the number of penalties being issued to the super-rich.

- Richard Partington

In a report urging ministers to redouble their efforts to secure more of the money owed to the exchequer by wealthy people, the National Audit Office (NAO) said billions of pounds was going unpaid each year.

It said HMRC had greatly increased the additional tax revenue it was collecting from wealthy individuals by tackling non-compliance, but additional steps were required to ensure rich people paid their fair share.

The report comes as Rachel Reeves, the chancellor, faces renewed pressure to find extra money for public services and defence, amid warnings that she could be forced into raising taxes in the autumn budget.

Nick Williams, a former No 10 senior economic adviser who left last month, said yesterday that Reeves's spending plans were "not credible" and needed to be reassessed. Writing in the Times, he said: "The bottom line is that taxes will have to go up."