RPC said the payments, which were for the year to 31 March 2016, varied according to each case and were based on how much extra tax HMRC expected to recover as a result of the information given.
“Informants who supply information which is expected to produce a higher tax yield could receive substantial rewards, which may prove a big incentive for those with intimate knowledge of financial arrangements to inform on companies and wealthy individuals,” said Adam Craggs, tax partner at RPC.
Payments appropriate
HMRC said the information it receives comes from a number of valuable sources and it is always used to ensure that tax laws are respected.
“When appropriate HMRC pays a reward for information. Rewards are linked to the results delivered by the information,” a spokesman for the tax office said.
“HMRC is under pressure to make the most of any opportunity to increase the tax yield.”
RPC said it believes that HMRC has been under growing pressure from the UK Treasury to crack down on tax evasion and avoidance to increase the tax yield and boost revenue for the Exchequer.
Financial services firms at risk
The law firm said that the professional and financial services sector could particularly be at risk, with some concerned that ex-employees could use it as an opportunity to inform on former employers in exchange for monetary rewards.
“HMRC is under pressure to make the most of any opportunity to increase the tax yield,” RPC said in a statement. “For example, the Panama Papers data leak has provided HMRC with a substantial list of potential targets.”
A large amount of documents were leaked to the public in April 2016, providing potential informants with an opportunity to inform on former colleagues or employers who may be mentioned in the leaked documents.
“The hundreds of thousands of pounds HMRC is paying out every year to informants reflects the pressure they are under from the Exchequer to increase the tax yield,” said Craggs.
