Tax investigations set to follow as whistleblower payments rise

Payments made by HMRC to informants hit a new high of £605,000 in 2014-15, up from £402,000 in the previous tax year, suggesting that more tax investigations are on the way.

The figures were revealed on 15 June by City law firm RPC, which said increasing public awareness of tax issues had led to more individuals seeing opportunities to alert HM Revenue & Customs (HMRC) to possible tax evasion by former employers or ex-spouses, as well as other potential tax evaders.

The firm said more people working in financial and professional services were also offering up information.

In the United States, the Internal Revenue Service can award a whistleblower up to 30 per cent of the additional tax, penalties and other amounts it collects from a taxpayer if it uses information the whistleblower provided.

Adam Craggs, a partner at RPC, said: “HMRC is taking inspiration from the US investigatory procedures in a number of areas. The system for paying informants in the future could become very similar to that operated in the US, which could potentially encourage more informants to come forward.”

With the government and HMRC intent on closing the UK tax gap – the difference between tax owed and tax collected – the range of tax crackdowns and tax investigations, including the use of whistleblowers, is likely to continue to grow.

 In the event of a tax investigation, working with the experts at Taxation-Investigation can help to clarify the taxpayer’s position and identify their options.

We’ll provide constructive advice and support, enabling taxpayers to focus on their day-to-day affairs while we liaise with HMRC inspectors to bring the investigation to a satisfactory conclusion. Where tax affairs are in order, we will argue the case robustly and we will also negotiate any settlement necessary with a view to minimising HMRC claims for any tax and penalties.

For more information on our tax investigation services, please contact us.