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City law firm RPC says that HMRC has made payments totaling £402,160 to informants in the last year to secure information on possible tax evasion. HMRC is under pressure from the Treasury to increase the tax yield for the Exchequer and it has in recent times been targeting high net worth individuals.
The amount of money paid to informants has steadily risen from £309,620 in 2011 to £402,160 by 2014, a jump of 30 per cent in three years.
Adam Craggs, Tax partner at RPC, said: “The amount of money from taxpayers that HMRC is paying out each year to informants has been steadily rising and this year it has reached a record high. The pressure on HMRC from the Exchequer means that it is turning to all available means in order to meet targets.
“HMRC does not widely publicise the fact that it makes payments to informants partly because this is a controversial policy and also because it does not want to make payments unless it really has to. If too many people know that they can get paid by HMRC for providing information they may be less willing to provide information for free.
“When HMRC has a target in its sights, it often relies upon information or documents supplied to it by former spouses or employees who may bear a grudge against the taxpayer concerned.
“Much of the money paid to informants will relate to personal tax evasion by wealthy individuals, but HMRC will use disgruntled employees to inform on underpaid corporation tax and the use of false invoices to dishonestly depress the real profit of the company.”
Whistle-blowers
RPC explains that in the USA, the Internal Revenue Service (IRS) has a clearly stated policy of paying whistle-blowers up to 30 per cent of the additional tax, penalty and other amounts it collects to informants. This raises the question of whether in the current economic climate the UK might set up a similar scheme with a clearly set out financial incentive for informants.
Adam Craggs said: “There are a lot of areas where the Treasury and HMRC are adopting tax collection policies from other jurisdictions such as the US, and in the future HMRC’s system for paying informants might be changed to bring it into line with the system used in the US. At the moment, its system for paying informants is much less transparent.
“The criteria for paying informants should be clearly set out by HMRC as such payments are funded using taxpayers’ money. It is important that there is proper accountability and for the public to know how much is being paid, who it’s being paid to and what it’s being paid for.”
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Susie Hughes © Shout99 2014
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