- RPC data shows reports have increased from 106,920 to 157,270
- The increase is from 2021/22 to 2022/23.
Whistleblower reports to HMRC have increased by 47 per cent in the last year, with experts attributing the rise to fraud linked to government Covid-19 support.
The number of whistleblower reports to HMRC increased from 106,920 in 2021/22 to 157,270 in 2022/23, according to new research from international law firm RPC.
Adam Craggs, partner and head of RPC’s regulatory, financial crime and tax disputes team, said the sheer scale of fraud against the government’s Covid-19 assistance schemes could be a major driver of the jump.
It follows separate data from the Department of Business and Trade in September showing that UK lenders responsible for distributing government-backed loans during the pandemic had flagged almost £1.7 billion in potential credit fraud by the end of June, up 43 percent more than in three months. earlier.
New research from international law firm RPC shows that whistleblowers reported to HMRC last year, from 106,920 in 2021/22 to 157,270 in 2022/23.
The National Audit Office estimates that at least £7.3bn was lost to fraudsters taking advantage of the furlough scheme and the Eat Out to Help Out initiative.
Craggs said: ‘The furlough scheme was a magnet for fraudsters with significant losses to the public purse.
‘The general public is understandably outraged by this, and this feeling of outrage may be a factor in this large increase in reports of suspected fraud to HMRC.
“Allegations of tax fraud will come from a wide range of sources, such as disgruntled former employees, former partners or spouses, clients and competitors.”
Craggs added that HMRC is cracking down on tax fraud through the introduction of its new ‘Connect’ AI technology, as well as international co-operation.
Michelle Sloane, partner at RPC, believes that although an increase in fraud reports suggests HMRC is successfully encouraging whistleblowers to come forward, more can be done.
Currently, HMRC pays whistleblowers on an “ad hoc” basis, while standardizing payments would likely mean a higher quality of evidence being passed on to the tax authority, according to RPC.
Sloane points to the U.S. Internal Revenue Service, which pays whistleblowers 15 to 30 percent of additional taxes collected as a result of successful investigations initiated with whistleblower information.
The IRS paid 132 whistleblowers a total of $37.8 million (around £30 million) in 2022, 58 times the amount paid by HMRC over the same period.
Sloane said: ‘Paying whistleblowers is likely to increase the number of investigations and improve the quality of information HMRC receives.
‘The IRS has shown that financial incentives lead to successful investigations. HMRC should seriously consider this option if they want to reduce the amount of money lost as a result of tax fraud.’
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