By Isabella Colletta
HMRC are investigating approximately 4,500 cases of furlough fraud after their tax evasion hotline reveals tip-offs. The Revenue made their first reported arrest in August, with the 57 year-old suspect being investigated into £495,000 ($658,694) worth of furlough scheme fraud.
The amount of money HMRC have paid informants on tax evasion has also increased by 63% within the last year. UK law firm RPC said that in 2019/20 the Revenue paid £473,000 whereas the paid only £290,250 to informants in the previous year.
RPC head of tax Adam Craggs said “HMRC receives a large number of 'tip-offs' to its hot-line in relation to small-scale tax evasion, but it has come under pressure in recent years to investigate big ticket tax evasion and it is willing to pay informants who have reliable information relating to such fraud”.
A number of spokespeople from RPC have suggested that HMRC may further increase its use of paid informants as it looks to raise income from tax investigations. High-quality information surrounding abuses of the government’s Coronavirus Job Retention scheme will be of great value to the revenue, according to RPC.
Paid informants reporting on tax evasion have previously been disgruntled or former employees, RPC have said. The firm warns that HMRC must be cautious to ensure sources gained their data through proper means when investigating employers which have taken advantage of the Coronavirus stimulus package.
RPC partner Michelle Sloane said “the payment to informants for data that has been taken illicitly raises certain ethical issues for HMRC. Disgruntled employees may tip-off HMRC as a way of getting back at their employer. HMRC needs to ensure that it carries out appropriate due diligence to ensure the information it receives is credible.”