Tax informants paid a record amount

A record sum was paid out to tax informants in the last year, increasingly to individuals working in financial and professional services, a law firm says.

In fact, HM Revenue & Customs paid tax whistleblowers £605,000 in the year to March 31st, up 50% on the previous year when it forked out its then-record sum of £402,000, says RPC.

Greater pressure on HMRC to boost its tax yield helped drive the increase, but an even bigger cause appears to be heightened awareness of tax abuse from the public. And from professionals.

“More individuals working in financial and professional services [are] increasingly offering up information, in the hope that HMRC will pay them for such information,” said RPC.

“[These professionals] will often have first-hand insight into the tax affairs of individuals and businesses – [and] HMRC is demonstrating its willingness to invest more money in [them].”

The tax department is less willing to publicise the payments its makes to informants, on the basis that some may become less likely to inform on a spouse or ex-employee for free.

However pointing to the other end of the spectrum, RPC’s tax partner Adam Craggs said “many members of the public have an unrealistic view of the value of their information.”

The American tax system avoids such unrealistic expectations by having a policy of paying whistleblowers up to 30% of any additional tax, penalty and other amounts the IRS collects.

“HMRC is taking inspiration from the US investigatory procedures in a number of areas,” reflected Craggs. “The [UK] system for paying informants in the future could become very similar to that operated in the US, which could potentially encourage more informants to come forward.”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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