HMRC whistleblower payments up 63%

HMRC’s payments to whistleblowers reporting tax evasion have ballooned 63% in the past year to hit £473,000, but remain very modest compared to the US approach to wrongdoing, according to analysis of the tax department’s annual report by BDO

The firm said the sharp rise in payments suggests more people are coming forward to make reports about those evading tax.  The previous year figure was £290,250.

However, BDO points out that in 2019 the US tax authorities over $120m (£90m) to whistleblowers, at an average of $664,000 (£500,000) per award, whilst collecting over $660m (£497m) of additional taxes.

 Under a formal US whistleblower programme, awards of between 15% and 30% of the tax collected can be made.

The firm describes HMRC’s total payments as ‘surprisingly small’, given that the UK tax gap (the theoretical difference between the taxes due to HMRC and those actually paid) for 2018/2019 stood at £31bn, of which £5.6bn was attributable to tax evasion.

HMRC does not report specifically on the additional taxes collected relating to whistleblower payments, although its payment scheme is subject to regulatory oversight.

Dominic Arnold, partner in tax dispute resolution at BDO, said: ‘The sharp increase payments to whistleblowers by HMRC would suggest an increase in the number of people coming forward to report tax evasion, although the number of awards made is not known.

‘In the past HMRC has said that the majority of people coming forward to provide information do so without expectation of financial reward.

‘However, many believe that a more formal and transparent US style system might incentivise a greater number of people to come forward and report tax evasion.’

Useful links:

HMRC 2019/2020 report

US Internal Revenue Service Program 2019 report

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