THE super-rich are appearing to get preferential treatment from HM Revenue and Customs and are not being properly pursued for outstanding tax bills, the House of Commons spending watchdog has concluded.

MPs on the public accounts committee claimed HMRC’s failure to clamp down on wealthy tax dodgers is undermining confidence in the whole system.

Their report published yesterday examined HMRC’s specialist unit, which collects tax from individuals with more than £20 million and found that “the amount of tax paid by this very wealthy group has fallen by £1bn since the unit was set up” in 2009 – even as tax receipts rose by £23bn.

It also highlighted concern about tax evasion in the football industry and the “misuse” of image rights to reduce tax liabilities.

It revealed that 43 players, 12 clubs and eight agents were currently the subject of “open inquiries” by HMRC.

Current tax rules allow for income from image rights to be treated as a separate revenue stream for tax purposes meaning that taxpayers who believe their image had a market value could set up a company to receive payments for those rights.

Meg Hillier, the MP who chairs the committee, said HMRC’s claims about the success of its strategy to deal with the very wealthy did not add up. “If the public are to have faith in the tax system then it must be seen to have fairness at its heart,” she said. “It also needs to work properly. In our view, HMRC is failing on both counts,” she said.”

Tax officials calculated that there were about 6,500 people with more than £20m in 2015-16, about one in every 5,000 taxpayers. In 2009, a specialist unit was set up to bring in more money from them. MPs questioned the role of the specialist unit and some of its practices.

“We were not convinced by [HMRC’s] assertion that there is a clear line between giving its view on potential transactions and giving tax advice and we do not think there is enough clarity about what customer relationship managers can and cannot do,” the report said.

The committee pointed out that advice from officials to wealthy taxpayers was not recorded.

“While calls from most taxpayers to HMRC call centres are recorded routinely, meetings and phone calls with high net-worth individuals are not recorded,” the report stated.

HMRC said the pursuit of high net-worth individuals had resulted in the collection of an additional £2.5bn in revenues. But it was unable to explain why the income tax they paid fell by 20 per cent – from £4.5bn in 2009-10 to £3.5bn in 2014-15 – when the overall income tax take rose by £23bn.

The committee said about one third of the individuals concerned were likely to be under inquiry by HMRC for unpaid tax – with cases with a potential value of £1.9bn currently under investigation.

However, the report found HMRC had a “dismal record” when it came to prosecuting the very wealthy for tax fraud in the criminal courts.

In the five years to March 31, March 2016, it completed 72 fraud investigations into high net-worth individuals but only one case resulted in a successful criminal prosecution. Of the 850 penalties issued to the very wealthy since 2012, the average charge was £10,500 – a figure the committee said was likely to be too small to act as a deterrent.

An HMRC spokesman denied there was preferential treatment for the super rich.

He added: “There is absolutely no special treatment for the wealthy and, in fact, we give them additional scrutiny, with one-to-one marking by HMRC’s specialist tax collectors to ensure that they pay everything they owe, just like the rest of us do. We have secured an additional £2.5bn from the very wealthiest since 2010.”

The chief executive of HMRC, Jon Thompson, told the public accounts committee in December that he would like to see a review of the way footballers can reduce their tax bills. He said payments to them for their image rights were “the most significant risk in football” faced by HMRC.

ENDS