HM Revenue and Customs (HMRC) has paid over £509,000 ($650,000, €596,000) to whistleblowers in the 2022/2023 financial year, according to research by international law firm RPC.
The amount of money being paid to individuals providing evidence about tax fraud has increased by £14,000 from 2021/22 and up 75% from five years ago.
However, Adam Craggs, partner and head of RPC’s tax, financial crime and regulatory team, says that HMRC payments to informants is small given the size of the UK tax gap. Craggs adds that one way to encourage more information in relation to tax fraud would be to increase transparency regarding how the reward system operates, how much money is paid to informants and the number of awards made.
He also suggested that the HMRC could benefit from adopting the US approach of offering more money to whistleblowers.
The US Internal Revenue Service (IRS) pays whistleblowers 15-30% of the additional tax collected through investigations instigated as a consequence of information received. In 2022, $37.8m (£29.6m, €34.7m) was paid by the IRS to 132 whistleblowers, 58 times the amount paid to UK whistleblowers.
‘Transparent system’
Michelle Sloane, partner at RPC, said: “HMRC should increase the incentive and transparency it uses when it comes to whistleblowers. People aren’t aware of the cash incentives that exist for additional tax collected as a consequence of information received. A more formal and transparent system might incentivise a greater number of people to come forward and report tax evasion.”
A spokesperson from HMRC told International Adviser: “There will be times when it is appropriate for us to make payments to individuals for providing us with information that helps us tackle avoidance and evasion.
“We make these at our own discretion, based on what is achieved as a direct result. We value the information we receive from the public and business community. We urge anyone with information about tax fraud to report it to us online by going to GOV.UK and searching ‘report fraud HMRC’.”
