HM Revenue & Customs (HMRC) has almost doubled the amount paid to those who provide tips on suspected tax evasion, paying out almost £1 million (£978,256) in the 2023/2024 financial year, up from £508,500 the year before.
The increase comes amid growing pressure to reduce Britain’s £39.8 billion tax gap – the difference between the tax that should be collected and what is actually received.
According to data obtained under the Freedom of Information Act from accountancy firm Price Bailey, HMRC received 151,763 anonymous tips through its fraud hotline in 2023/2024, slightly down on the 157,270 reports in 2022/2023 but still the second highest in seven cases . year.
Andrew Park, Tax Investigations Partner at Price Bailey, described the payouts as ‘paltry’ compared to the billions lost to tax fraud every year. He suggested that significantly higher rewards could encourage more individuals to come forward with high-quality information. “A transparent system where the reward is proportional to the amount of tax recovered would go a long way to encouraging big tips,” Park said.
Price Bailey highlighted the contrast with the United States, where the Internal Revenue Service (IRS) offers significantly greater rewards. In the most recent financial year, the IRS paid $89 million to 121 whistleblowers, leading to the recovery of $338 million in taxes – an average of $735,537 per whistleblower.
Park noted that the British system is less transparent and that the award is discretionary and not linked to the amount of tax recovered. This lack of significant financial incentives, coupled with the potential employment risk for whistleblowers – many of whom are employees of the companies they report – may deter individuals from reporting major tax fraud.
He also pointed out that the lengthy process of resolving tax disputes is an additional hurdle. “Anything HMRC can do to make its reporting system more accessible and transparent would be welcome,” Park added.