HMRC

HMRC pays £400,000 to tax fraud informants

While the size of payment to an informant is typically decided on a case-by-case basis, RPC said it is often based on the amount of money HMRC expects to recover

HMRC reportedly paid informants around £400,000 for tip-offs about tax fraud over the past year, according to law firm RPC.

The firm said it was “likely” that a proportion of the money paid to informants would have been for information relating to the abuse of Covid support schemes, such as the furlough scheme.

In its ‘Annual Report and Accounts’ for 2020 to 2021, HMRC estimated that £5.2bn of the money it paid out as part of the furlough scheme “ended up in the hands of organised criminals, fraudsters or was paid out erroneously”. 

Following a rise in furlough fraud, a dedicated hotline was set up by HMRC to enable people to report suspected abuse of the scheme. So far, the hotline has received more than 28,000 reports, according to RPC.

While the size of payment to an informant is typically decided on a case-by-case basis, RPC said it is often based on the amount of money HMRC expects to recover as a result of the information.

According to the firm, many furlough fraud investigations have been triggered by information provided by disgruntled or former employees, who “may be seeking to punish bosses that they feel have wronged them”.

Adam Craggs, partner and head of Tax, Regulatory and Financial Crime said: “HMRC is fully engaged in clamping down hard on tax evasion and will use any information that can help it catch tax evaders and those who assist in such criminal activity. Paying informers for helpful information is part of that process.

“HMRC is under pressure from the Government to increase the tax yield. With increased public spending during  the pandemic, recovering unpaid tax will be a high priority for the Treasury as it seeks to increase Government revenue.”

Michelle Sloane, partner at RPC, added: “The financial reward available for providing data to HMRC may attract more informants to contact HMRC. Those with personal knowledge of a company’s or individual’s illicit financial or tax arrangements may be motivated to come forward if they think they will receive a financial reward.”

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