This blog answers the question “Do you get a reward for reporting tax evasion in the UK?”It also looks at the rewards offered to whistleblowers by HMRC and the laws enforcing these prizes. The results of the HMRC Annual Report and Accounts (2019) which exposed tax fraud are discussed.

Do you get a reward for reporting tax evasion in the UK?

Yes, you get a reward for reporting tax evasion in the UK. Whistleblowers are rewarded financially by HMRC in some cases. Not all informants of tax evasion expect or are paid for their work. Her Majesty’s Revenue and Customs is of the view that higher payments are welcome and that the US system of remuneration to tax evasion whistleblowers is highly effective.

Not everyone will report tax fraud in the absence of a financial incentive although most whistleblowers in the UK do so. The reward is a percentage of the amount of tax evasion recovered from the absconder.

The reports of rewards to whistleblowers are kept confidential by HMRC who contact the department anonymously.

What protections are granted to people reporting tax fraud in the UK by the Public Interest Disclosure Act 1998?

The Public Interest Disclosure Act 1998 protects people reporting tax fraud from personal reprisal or unfair treatment by the entity or person being investigated.

A “qualifying disclosure” provided by a whistleblower includes one or more of the following:

  • Damage to or likelihood of a negative impact on the environment by the activity
  • The threat to the security or well-being of any individual
  • A person is wrongly going to be punished for a crime they did not commit (commonly known as a miscarriage of justice)
  • The information or knowledge which proves or justifies any of the above statements has been concealed deliberately from HMRC
  • A person has not completed a legal obligation or is not likely to do the same in the future.

Which problems relating to tax evasion prosecution in the UK need to be tackled to minimize losses in collection?

The results of tax auditing are characterised by their lack of regularity and their low predictability. This characteristic makes any comparison from year to year difficult and not very effective. The volume of amounts notified and recovered must be assessed over a longer period of time: the results of tax auditing depend very strongly on exceptional cases.

A second difficulty in assessing the results of tax audits is the impossibility of measuring the effort rate. At present, we evaluate the results in abstract: we cannot compare the results of a tax audit to the volume of fraud. 

Admittedly, such a comparison has its shortcomings and must be analysed with caution; this theoretical volume of tax fraud should not be considered a potential and attainable source of revenue for our public finances.

 The absence of a reliable evaluation of tax evasion in Britain poses a threefold problem. It prevents any calibration of the means of tax auditing, it makes it impossible to evaluate the effectiveness of tax auditing in relative terms (and, consequently, its efficiency), and it allows everyone to launch their own evaluation in the public debate, preventing any calm debate on this irritating subject.

Finally, a third difficulty stems from the impossibility of having a precise vision of the resources allocated to tax audit.. Estimates of the number of staff dedicated to tax auditing, therefore, remain general: tax auditing activity thus mobilises more than 10,000 agents within HM Treasury, a number that has stabilised in recent years according to HMRC. 

What seems certain is that the number of tax auditors has decreased overall over the last ten years. However, this decrease has not affected all jobs in the same way: the most qualified jobs and the auditors of the specialised and national departments seem to have been preserved

Her Majesty’s Treasury currently manages more than 700 applications, many of which are obsolete. Given the challenges it faces, the special rapporteurs believe that its IT budget must be protected.

The development of technological tools is therefore essential to enable the services, administrations, and departments to process all the data they receive and to detect the most complex frauds.

Estimates of fraud are extremely diverse

Indeed, this theoretical volume of tax fraud should not be considered a potential and attainable source of revenue for our public finances: not all amounts would be recovered, not all procedures can be completed and tax evasion is sometimes based on legal devices              (“tax optimisation”). It is therefore important to avoid easy shortcuts between the amount of tax evasion and the volume of tax revenues or budget deficits.

The absence of a reliable evaluation in Britain poses a double problem for the evaluation of tax audit resources: it prevents any calibration of its resources and makes it impossible to evaluate the effectiveness of tax audit in relative terms and, therefore, its efficiency. 

How, in fact, can the action of HMRC be oriented without an evaluation of fraud?

A more detailed evaluation of fraud, for example, according to the type of tax or geographical area, would help optimise the adaptation and allocation of tax audit resources.

 As early as 2007, the Department for Levelling Up, Housing and Communities noted on this subject that “the evaluation of fraud has an operational character in relation to the programming of controls and, more generally, on the global strategy to counter it 

In 2007, the Department for Levelling Up, Housing and Communities (DLUHC) estimated the amount of tax fraud, i.e. tax and social security fraud combined, at between 29 and 40 billion pounds. 

This amount was obtained by applying a direct statistical method to the data from the controls of HMRC and the network of unions for the collection of social security and family allowance contributions for 2006

Conclusion

This blog post addressed the question “Do you get a reward for reporting tax evasion in the UK? Whistleblowers reporting tax fraud to HMRC get handsome rewards for their information. Reporting tax evasion is becoming indispensable to the agencies of HMRC as the value of revenue lost to tax evasion is rising fast each year.

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Frequently Asked Questions (FAQs) : Do you get a reward for reporting tax evasion in the UK

How do I return the paper forms which I’ve completed?

You can scan or photograph your completed forms and upload them by using the council tax inquiry form. Or you can send paper forms to the postal address of your tax council like this one for Middlesbrough

Revenue Services

PO Box 2

 Middlesbrough House

Corporation Road

Middlesbrough

TS1 2YL

Why has my council tax reduction ended or changed?

You will receive a council tax reduction notification which explains how your council tax reduction is calculated.

The normal reasons for your council tax reduction being canceled are:

  • Your state benefit entitlement has ended
  • You no longer qualify for Council Tax reduction because your circumstances have changed. This usually means your circumstances have improved or that you have a higher income level than before
  • We’ve sent you a review form and you haven’t returned it to us
  • You’ve moved house without informing us
  • You haven’t disclosed all the information we asked you for to calculate your council tax reduction

I have not received my new council tax bill, what can I do?

Council tax bills for the new year starting 1st April are posted by 15th March to ensure that they arrive in time for the first installment payment date of 1st April. A copy of this bill can also be provided on request

Citations

HMRC Annual Report 2019

Public Interest Disclosure Act 1998

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