More bounty for HMRC informants

Payouts to Revenue snitches increase again

Last year it was revealed that HMRC informants had increased in their thousands over two years. Each day more than 250 people are contacting the Revenue to report suspected tax avoidance or fraud.

As a result of this new found willingness amongst the public to ‘spill the beans’, HMRC paid out a record of just over £402,000 in 2014 in return for this valuable information. That record however has been surpassed in the year to 31st March 2015, when a total of £605,000 was paid out, according to London law firm, RPC. This represents an increase of over 50%.

RPC believe that this significant rise in rewards is due, in part, to increased public awareness about the Revenue’s clampdown on those who seek to avoid paying tax. People are now more quick to notice an opportunity to bring to HMRC’s attention potential tax evasion being committed. Typically informants have been embittered and aggrieved former spouses and employees but that profile is changing, according to RPC, as more individuals in the financial and professional services are turning to snitching in the hope that they will be handed a cash reward. These people often have first hand knowledge of an individuals or businesses tax affairs which is gold dust to HMRC.

As HMRC are being placed under increasing pressure to up the tax take, cash for information that helps the department weed out tax evaders is becoming more popular.

Although the steep rise in cash rewards is due in the main to heightened public awareness, Adam Craggs, Tax Partner at RPC believes that “many members of the public have an unrealistic view of the value of their information.”

The payment of rewards is not widely publicised and is at the discretion of HMRC. They are based on what is achieved as a direct result of the information provided and a range of factors determine the amount. This is in contrast to the whistleblower system employed in the U.S.A, where the Internal Revenue Service (IRS) pays it informants up to 30% of the tax and penalties it collects. Could this be the natural progression for HMRC in its mission to squeeze out every last penny from tax evaders?

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