Using a Freedom of Information Request, The Telegraph today revealed that the Revenue’s pay out to informants via its confidential telephone hotline reached £600,000 over 2014/15, up from £402,000 a year before.
An HMRC spokesperson said: “Cash rewards are discretionary and based on what is brought in as a direct result of the information provided. We get information from a wide variety of sources and it is always used to make sure everyone pays what they should.”
Not-so-hidden agenda
Ray McCann, partner at New Quadrant Partners, said it is likely that a proportion of this income has come from estranged spouses, ex-business colleagues and partners.
“HMRC has driven an agenda of encouraging those with concerns about tax avoidance and evasion to help them,” he said. “Estranged spouses have always been a good and, at times, controversial source of information and no doubt this will continue.
“Ex-business colleagues and partners are another. In my experience, most “informers” have an agenda and conscientious citizens are likely to be in the minority.”
He added that as the Revenue reduces staff levels, paying for information will become a cost effective way of getting a lead on tax evaders.
“It will however only ever be a small part of HMRC’s compliance efforts, and especially where estranged spouses are concerned these days it may be a race to see who can get in front of HMRC first.”
Culture of spying
Andrew Watters, director at Thomas Eggar, said: “In the growth of ‘sellers’, people providing information to HMRC, there are two likely factors: austere times gives one a keener smell in sniffing out perceived unfairness on the part of one’s neighbour, whether family member or work colleague; and HMRC’s campaign on ‘tax avoidance’ gives a ready focus for a victim mentality.
“The ‘buyer’ needs to be prepared to pay and every pound paid has to be authorised. HMRC seem to be encouraging a society where we are all seeking out injustice in tax and they will pay people to do so.”
He added that it seems “unlikely” that there has been a 50% increase in tax non-compliance over the last year, given the general belief that it is becoming less and less common, putting the increase instead down to an increased incentive to “spy” on others.
“One does not need to condone aggressive tax avoidance to feel a bit worried about the creation of a society where neighbour is encouraged to spy on neighbour for the state, even where the neighbour is suspected of being not very nice,” he added.
Kieron Clement-Smith, tax associate at Edwin Coe, added: “This increase has followed an increase in public awareness of HMRC’s pursuit of tax evaders.
“In addition to receiving tip–offs from ex-spouses, there seems to be an increase in the number of whistleblowers who are employed in the financial services sector.”
