HMRC Pays Tax Informants £343K

THE NUMBER OF CALLS to the UK tax authority’s fraud hotline doubled last year, with informants submitting more than 40,000 tip-offs about people who might not have paid their taxes.

HM Revenue & Customs said it had rewarded those tips with a total of £343,500 in payouts in the 2017-18 tax year, a 23% fall on the previous year. Call volumes were greatly increased by merging two hotlines for tax evasion and customs fraud into a single number that has been heavily promoted to the general public.

HMRC said the majority of calls in 2017-18 concerned tax evasion, prompting advisers to complain about the “extreme lengths” the authority is prepared to go to in its investigations into individual taxpayers. HMRC said the rewards were based on what had been achieved as a direct result of the information provided, the amount of tax recovered, the estimate of the loss of revenue prevented and other measurable benefits such as the time saved in working compliance cases.

“Our public services rely on everyone paying their taxes,” said HMRC. “Last year, HMRC secured an additional £30.3bn in tax through our work to tackle error, avoidance and evasion, and intelligence we receive from the public makes an important contribution to our work to close the tax gap and fund our vital public services.”

The authority said it received about 100,000 reports of tax evasion last year when online and postal reporting were taken into consideration. The telephone fraud hotline is open between 8am and 8pm, seven days a week. HMRC urged anyone who wished to report a fraud to search on to find its dedicated hotline number, online reporting form and postal address.

Adam Craggs, tax partner at RPC, the law firm, said: “HMRC appears to be willing to utilise any information that it receives, irrespective of its provenance.” Craggs said there was a risk that informants attracted by a large cash incentive might pass on “misleading information” about former spouses, for example, during divorce proceedings where financial negotiations broke down. He added that similarly, giving payments to informants could encourage data theft by disgruntled former employees with an axe to grind against their former employer.

“Rather than relying on informants to increase the tax yield, HMRC should be provided with the necessary resources it needs to enable it to properly deal with compliance issues,” he said.

HMRC said that although it paid some informants, it did not provide updates to individuals who reported tax evasion – nor would it identify the source of information obtained confidentially. The authority said that while it understood that this could be frustrating for those who reported suspected tax cheats, it had to adhere to the government’s legislative obligations. “We find that despite this restriction, the majority of the public continue to be happy to report any wrongdoing,” HMRC said.


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