People who reveal the tax dodging practices of their ex-business partner, spouse or civil partner to HMRC can be rewarded up to a quarter of a million pounds.
How much can you make from a tax tip off?
This system of giving money for tax dodging tip offs is allowed under the Commissioners for Revenue and Customs Act 2005 and is part of HMRC’s intelligence and risk section.
The amount of reward money issued is dependent on how much money HMRC recoups as a result of gaining your knowledge. An HMRC spokesperson told The Times that the “vast majority” of those passing information to HMRC do not get a reward.
For those that do, the amount they receive is tax free. As the reward amount rises, a higher level of seniority is required to sign it off:
- Up to £250,000 maximum: director
- Up to £100,000: deputy director
- Up to £10,000: high grade civil servant
- UP to £5,000: senior intelligence service officer
To achieve the maximum amount, your information will need to have a huge impact. An HMRC source described it as “mother-lode material…It would have to be enough to close down a company, or something”, to The Times.
How do we know about these secret payments?
The National Audit Office is our watchdog for public spending. Its head, Sir Aymus Moore, published the figures for HMRC’s tax tip-off payments because they are not part of HMRC’s declared annual accounts, as it is not a “key performance metric”.
In five years, £2.23million of taxpayers’ money has been paid to people as a reward for giving tax avoidance information to HMRC.
- 2013-14: £402,160
- 2014-15: £604,800
- 2015-16: £460,433
- 2016-17: £421,460
- 2017-18: £343,500
How do you feel about that?
Is this a transparent use of public money?
As these amounts do not have to be reported as part of HMRC’s annual accounts, can this be considered a transparent system? A former HMRC employee, Adam Craggs, who is now a partner at Reynolds Porter Chamberlain (a law firm), gave The Times his opinion of the tipster reward set up.
“You would get a disillusioned spouse who said that they were upset with their husband and would give details to HMRC. They knew where the bodies were buried, as it were. It is not a transparent process and it is, to a certain extent, open to abuse for those with vested interests. Public money is being paid to informers (your money and my money).”
As the person receiving money is essentially an informer, the privacy of the transaction does need to be carefully guarded. And, motives aside, individuals only receive money from HMRC if their information leads to the recovery of otherwise unpaid tax to the Treasury.
Perhaps knowing how much this figure is would help to justify this kind of information gathering. Maybe if the amount of unpaid tax subsequently recovered is proven to be triple that paid out, an ‘end justifies the means’ reasoning can be accepted.
After all, HMRC are trying to plug the £33 billion tax gap left by the 5.7% of us who are not paying our fair share. As it stands, we can rely on the National Audit Office to hold HMRC, and any other government department, to account for all of its annual spending.
