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HMRC pays over £500,000 to tax snitches

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HMRC pays over £500,000 to tax snitches

HM Revenue and Customs (HMRC) paid £508,500 last year to whistleblowers reporting their ex-spouses and former employers for tax fraud.

Over the last five years, payouts to informers have jumped 75pc, according to data obtained in a Freedom of Information request.

HMRC asks taxpayers to snitch on individuals or businesses who they suspect are underpaying tax or committing some kind of fraud.

Tens of thousands of disgruntled employees and former spouses come forward every year, with the taxman receiving 73,000 whistleblowing reports in 2019-20.

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More recently, employees have reported their employers for furlough fraud, perhaps contributing to the rise in payouts.

This comes as the tax man steps up the number of “dawn raids” it conducts as part of investigations into tax fraud. Officers in HMRC’s Fraud Investigation Service searched 623 properties last year, an annual rise of 36pc.

Over the past five years, more than £2m of taxpayers’ money has been spent rewarding tax fraud tip-offs.

The tax office only offers payments on a discretionary basis when the information leads to the recovery of unpaid tax.

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Experts believe the Government should be more transparent about how it rewards tax fraud tip-offs – and more generous in what it pays out.

Michelle Sloane of the law firm RPC said: “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.”

With the “tax gap” – the amount of tax lost to error or criminality – at £36bn, HMRC is under pressure from MPs to increase its tax yield. At the start of this year the Public Accounts Committee, an influential group of MPs, criticised the tax office for its “lack of ambition” to tackle fraud and error.

A spokesman for HMRC said: “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.

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“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’.”

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