The tax authority dished out £509,000 to individuals providing evidence about tax fraud over the past year, according to research by international law firm, RPC
The current figure is up from the £495,000 paid out in 2021/22 and up a staggering 75% from the £290,000 paid five years ago.
But to Adam Craggs, head of the tax, financial crime and regulatory team at RPC, the Exchequer could benefit from adopting the US approach of offering far more generous awards to those who ‘blow the whistle’ on tax evaders.
The US Internal Revenue Service (IRS) currently pays whistleblowers 15-30% of the additional tax collected through investigations instigated as a consequence of information received.
In 2022, $37.8m was paid by the IRS to 132 whistleblowers – 58 times the amount paid to UK whistleblowers. In the same period, the IRS received 5,084 submissions and 12,597 claims for reward.
In Washington DC, one whistleblower - who wishes to remain anonymous - received an IRS whistleblower award of $11.9m (£9.3m) after providing the IRS with original information that led to an enforcement action against a Fortune 500 company. The IRS recovered tax, penalties and interest of $55m (£43m) as a result.
Craggs said: ‘More individuals, with evidence of serious tax fraud, would come forward if they knew they could be in line for a life-changing amount of money. Paying a proportionate amount for high-quality information that helps secure criminal convictions and the recovery of substantial amounts for the Exchequer would be a sensible step.
‘HMRC has been making payments for information on an ad hoc basis for many years and would benefit from improving the system and placing it on a more formal basis.’
One way to encourage more information about tax fraud, according to Craggs, would be to increase transparency regarding how the reward system operates and how much money is paid to informants and the number of awards made.
Many of these cases are also likely to come internally from businesses, such as disgruntled current or former employees or former partners and spouses.
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.’
For information on whistleblowing in the workplace, visit BrAInbox today where you can find answers to questions like What counts as whistleblowing?
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