HMRC paid informants over £343,000 for intelligence on tax evasion in the last year
HMRC paid informants more than £343,000 in 2017/18 for providing information on potential tax evasion as HMRC goes to increasingly extreme lengths to bolster its investigations.
RPC says that whilst tax evasion should of course be tackled, there is a risk that payments, some of which may be substantial, to informants could encourage data theft especially by disgruntled ex-employees who may have an axe to grind against their former employers.
HMRC also receive information from spouses during divorce proceedings, who provide details to HMRC in relation to their spouses often after financial negotiations have broken down.
RPC adds that there is a risk that an informant attracted by a large cash incentive might pass on misleading or incorrect information against former employers and spouses. This could lead to innocent individuals being subjected to invasive and unnecessary investigations.
Adam Craggs, Tax Partner at RPC, says: “Concerns have been raised that paying informants for intelligence on tax evasion might appear to legitimise data theft, raising both legal and ethical issues.”
“HMRC appear to be willing to utilise any information that they receive, irrespective of its provenance, as they did when they received stolen data from HSBC Suisse. It seems that as long as the data may increases the tax yield, HMRC will utilise it.”
Rather than relying on informants to increase the tax yield, HMRC should be provided with the necessary resources it needs to enable it to properly deal with compliance issues.
RPC adds that HMRC has faced criticism for a range of more aggressive tactics they are using to increase tax take. These include:
- Direct access to bank accounts: HMRC now has direct access to taxpayers' bank accounts which means that in certain circumstances it can take money directly from a taxpayer's bank account;
- Accelerated Payment Notices (APNs): HMRC can demand tax that it believes is owed to be paid within 90 days, without having to first establish that tax is liable before a Tax Tribunal or court and there is no right of appeal;
- Private sector debt collectors: HMRC is increasing its spend on outsourcing to private sector debt collectors, who often adopt aggressive methods of tax collection;
- Social media: HMRC inspectors now trawl through social media traffic for individuals boasting an extravagant lifestyle that is inconsistent with their declared income.