Business is booming.

HMRC whistleblower reports rise 70 per cent in two years

Whistleblower reports by company employees to HM Revenue & Customs have grown by 70 per cent over the past two years as staff have been encouraged to speak out amid widespread abuse of the furlough scheme.

The UK tax authority received more than 15,000 whistleblower reports from employees in the 12 months to April 1 2022, up from 13,600 the previous year and 8,900 in the year before the pandemic.

Andrew Sackey, tax fraud investigations partner at law firm Pinsent Masons, said the rise is “likely to be largely attributable to the number of cases of furlough fraud reported by employees/former employees since the start of the pandemic”.

HMRC has been under pressure to recover assets from fraudulent claims of its Covid support schemes — the coronavirus job retention scheme, self-employed income support scheme and Eat Out to Help Out — estimated to have cost £4.5bn over the pandemic.

To encourage whistleblowers, HMRC made information about whether furlough has been claimed for them available online. All employees can log into their personal tax account on the Revenue’s website to find this information and can file a whistleblowing report through HMRC’s anonymous reporting tool if appropriate.

Sackey said: “A combination of factors from public outrage over furlough fraud, to individual employee disgruntlement, has led increasing numbers of workers to report their employers to HMRC on a scale we haven’t seen before.”

Dawn Register, head of tax dispute resolution at accountant BDO, said that among areas of serious non-compliance, violations of the national minimum wage is a common topic for whistleblower filings.

In the past tax year, 38 per cent of whistleblowing reports made were deemed serious enough to warrant further action, with HMRC pursuing 5,800 disclosures. HMRC has been urged to boost payments to successful tax whistleblowers to boost the quality of the information it receives and help it recover more tax.

“Tips from whistleblowers have long been important to HMRC in identifying potential acts of tax fraud,” said Andrew Park, a tax investigations partner at the consultancy Andersen.

“The detail and quality of information that the whistleblower is able to provide and the potential size of the fraud indicated will have a big bearing on whether HMRC chooses to investigate or, perhaps, merely to send a generic ‘nudge letter’,” he added.

HMRC’s annual report showed that it sent 64,000 nudge letters related to fraud in coronavirus schemes in the past tax year, which recovered £22mn. Inquiries proved more effective — with 28,000 opened, recovering £204mn. 

A freedom of information request by law firm RPC revealed that 26 arrests were made in the past tax year in relation to Covid fraud, out of more than 41,000 compliance cases opened by HMRC.

Adam Craggs, a partner at RPC, a law firm, said: “Low numbers of arrests mean that white-collar crime in the UK is seen as too easy to get away with. That seems to be the case again with Covid-related fraud. There is simply not enough disincentive placed on would-be fraudsters with arrest rates remaining so low.” 

HMRC said in a statement: “Clamping down on those who try to cheat the system is a key priority for us. We are committed to ensuring that the tax system and labour markets operate fairly, efficiently and within the law.”

Source link

Comments are closed, but trackbacks and pingbacks are open.