Fancy a few quid?

The taxman has boosted payments to those tipping it off about tax dodgers. They include disgruntled employees and spouses who “know where the bodies are buried”, says the law firm RPC.

HM Revenue & Customs (HMRC) paid £473,000 to informants in the 12 months to April 2020 — up from £290,250 in the same period the year before. The firm says payments are likely to increase further as HMRC seeks to plug a hole caused by the economic fallout from Covid-19. HMRC strongly denies this, saying it is speculation. HMRC is looking into 8,300 cases of furlough fraud.

Adam Craggs, the head of tax investigations at RPC, said: “Disgruntled employees may tip off HMRC as a way of getting back at their employer. HMRC needs to ensure that it carries out appropriate due diligence to ensure the information it receives is credible.”

In some cases the data provided by an informant may have been obtained illicitly, raising “certain ethical issues for HMRC”, RPC claims. Another useful source of information is former spouses, it said.

HMRC receives a “large number” of tip-offs to a dedicated hotline in relation to small-scale tax evasion, RPC said. Businesses are required to have reasonable prevention procedures to stop their employees facilitating tax evasion. HMRC is investigating 30 cases with more than a third relating to the financial services sector, according to the accountancy firm Moore Kingston Smith.