Whistleblower reports to HMRC hit five year high
Whistleblower reports to HM Revenue and Customs (HMRC) have hit their highest level in five years as lawyers suggest the rise can be linked to a broadening sense of “public outrage”.
According to a freedom of information request to HMRC by City firm RPC, fraud reports have surged by 47 per cent in the past year, jumping from 106,920 in 2021/22 to 157,270 in 2022/23. Overall, this year’s figure is the highest number reported in the FOI, which dates back to 2018.
Steven Porter, partner at Pinsent Mason states that the increase may be driven by the fact that “people’s own pockets are being stretched thin at the moment”. He thinks this may lead people to pick up the phone to “try and find justice” against those committing some sort of tax fraud.
“We are seeing more inquiries, more questions being raised and just a slightly more aggressive approach from HMRC to chasing things down,” Porter concluded.
Adam Craggs, a partner at RPC added: “The furlough scheme was a magnet for fraudsters with significant sums lost in the public purse.”
“The general public is understandably outraged by that, and this sense of outrage may be a driver in this large increase in reports of suspected fraud to HMRC,” Craggs added.
It is estimated that between £3.2bn- £6.4bn was mistakenly given out through the UK’s Covid support schemes – either due to error or fraud.
John Barnett, partner at Burges Salmon explained that HMRC has been pushing their fraud hotline which is looking to be very “effective”.
He stated that HMRC has ramped up its one-to-many (OTM) approach.
The OTM campaign allows HMRC to reach lots of taxpayers about a specific issue where the data shows there is non-compliance. He pointed out that the revenue department is “more interested” in these big-picture campaigns rather than reviewing individual files.
“Improvements in internal systems, such as HMRC’s new ‘Connect’ AI technology, and international cooperation are helping HMRC to crack down on tax fraud,” noted Craggs.
Speaking to The Lawyer, HMRC general counsel, Alan Evans explained the the department currently has an ambitious strategy, with an end goal of 2030. With plans to reform the tax system to match technological advances and make it easier for the UK’s citizens to use.
Another way to encourage people to report is with payments. According to a report in August, HMRC paid out over £509,000 to individuals providing evidence about tax fraud over the past year, which was up from £495,000 in 2021/22.
Michelle Sloane, partner at RPC, notes that while the increase in fraud reports suggests HMRC is successfully encouraging whistleblowers to come forward, more can be done.
She explained that HMRC currently pays whistleblowers on an ‘ad hoc’ basis, whereas standardising payments would likely mean a higher quality of evidence being passed to the tax authority.
A HMRC spokesperson said: “We value the information we receive from the public and business community. We urge anyone with information about tax fraud to report it to us online by going to GOV.UK and searching ‘report fraud HMRC’.”