HMRC only investigates 35 wealthy individuals each year

The Government's tax man only investigates 35 wealthy individuals for tax evasion each year.

HMRC told the Public Accounts Committee it did not know how many people it had successfully prosecuted.

The Parliamentary report also found that HMRC has made only limited progress in reducing the level of tax lost, which has remained relatively consistent over the past five years.

It concluded that the department's failure to prosecute those evading tax "creates the impression that the rich can get away with tax fraud".

Meg Hillier MP, chair of the Public Accounts Committee, said the UK misses out on at least £16 billion in uncollected tax each year.

She said: "The public purse is missing out on some £16 billion in tax a year because of evasion and other criminal activities. When people break the law, there must be consequences – and there must be seen to be consequences.

"Honest taxpayers rightly expect a tax system that works fairly for all and any perception that this is not the case undermines the public's trust in that system. Its credibility is at risk."

Concern about tax evasion has increased following the leak of a huge cache of documents known as the Panama Papers, which revealed the tax affairs of thousands of individuals.

While evading tax by concealing income is illegal, avoiding tax by exploiting tax rules is not.

Ms Hillier added: "The release of the 'Panama Papers' underlines that there are wealthy people and companies who seek to keep their affairs secret.

"Where this secrecy involves criminal activity, prosecution must follow—and the threat of prosecution must serve as an effective deterrent to others."

A spokesman for HMRC said: “HMRC is one of the most effective tax collectors in the world, getting 93 pence of every pound due. Few other countries have a smaller tax gap.

“We remain relentless and strategic in tracking down the few that try to get out of paying their fair share."