In a bold move to combat tax fraud HMRC will introduce a whistleblower reward scheme modelled on the US system.
Those reporting tax evasion could potentially receive up to 25% of the resulting additional tax collected from their tip. With the UK tax gap reaching £39.8 billion, £5.5 billion of which is tax evasion, potential payouts totalling over £1 billion could be made. In the US the single largest payout to an individual was $200 million, with the IRS pocketing billions in unpaid tax.
Details on how the scheme will be implemented have not been published, but if it follows the US system it could fall into the same trap of overwhelming HMRC with unsubstantiated or vexatious claims. With HMRC customer services already stretched, it begs the question whether the system can cope with yet more calls and correspondence.
The devil, as always, will be in the details. In particular:
- What safeguards will be in place to prevent malicious or unsubstantiated tip offs?
- Will individuals have anonymity and employment protection?
- Will those facilitating or participating in evasion have immunity from prosecution if they tip off HMRC?
Lots of questions and for the moment it’s a case of “watch this space”.
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