Press Room

24 Aug 2022

HMRC responds to Andrew Park’s FOI request on tax whistleblowers – coverage in the FT and The i

The Financial Times and The i have covered HMRC’s response to Tax Investigations Partner, Andrew Park’s FOI request on tax whistleblowers, and Andrew’s comments on HMRC’s response.

Andrew’s comments were published in the FT and The i, 24 August 2022, and can be found here and here respectively. 

On 16 August, HMRC responded to a Freedom of Information (FOI) request from Andrew Park, who requested figures regarding the amount of reports made to HMRC’s Fraud Hotline, the number of rewards paid and the total amount paid in rewards, and a breakdown of what type of information the rewards were paid for.

HMRC’s response included figures indicating that while the year ending on 31 March 2022 saw nearly a 20 per cent decrease in reports made to the Hotline, it also included the largest total payout to whistleblowers of recent years – just shy of £500,000. However, the FT article notes that tax evasion costs HMRC roughly £32bn a year and that many commentators are calling for the agency to bolster these payouts to aid in diminishing evasion.

Please find Andrew’s full remarks on HMRC’s response below:

Asked whether people should be encouraged by a 25 per cent rise in payments to whistleblowers in the past tax year, Andrew remarked: “The payments during the previous year – 2020/21 – had dipped.  Most likely, due to the pandemic and less activity during lockdown and the general Covid restrictions.  The latest year is actually similar and only fractionally higher than 2019/20.”

Andrew also noted that despite payouts having reached a six-year high, it “appears broadly in line with the existing trend before the pandemic and although significantly up on 2020/21 is only modestly above the £473k paid in 2019/20. It in no way represents a step change in HMRC’s tactics and is still very meagre indeed compared to the c. $36m paid by the US IRS.”

When asked about the FOI response’s revelation that 2021-22 saw a 20 per cent drop in people reporting frauds, Andrew said: “Most likely, the drop in the number of potential frauds reported to HMRC in 2021/22 is a reflection less of fewer people being unaware they could make reports to HMRC (no reason for that) and more a reflection of the ongoing Covid measures during the year – people spending less time around each other in offices, socialising or mixing generally and less likely to become aware or suspicious of what other people might have been up to.”

When asked if Andrew would prefer the US approach to tax whistleblowers, he commented: “Yes.  However, HMRC should learn from the IRS experience and match greater incentives to report with greater resources to investigate and to process claims.  If one accepts whistleblowing facilities as a matter of public policy – and the HMRC one isn’t going away – it stands to reason that the effectiveness should be maximised.

“The US approach has achieved spectacular success in incentivising people with intimate knowledge of sophisticated arrangements within organisations to report major tax frauds – people who otherwise wouldn’t have taken the risk to their livelihoods.  The US reserves its most generous rewards for people reporting cases where ultimate ‘proceeds’ exceed $2m.  That’s not the sort of thing that people become aware of from backyard gossip.

“The flipside in the US is that the IRS has been inundated with more reports than it has been resourced to efficiently deal with.  Tax authorities everywhere are seldom given the resources they need.

“Whistleblowing in the UK tends to be more low-level and of generally smaller and less sophisticated matters – e.g. neighbours jealous of people with new cars and no official income or disgruntled lower-level employees who report out of a personal sense of injustice.  Many such reports are unfounded.”

Andrew Park

Andrew is the Tax Investigations Partner at Andersen LLP. He specialises in providing solutions to tax problems and resolving investigations and voluntary disclosures with HMRC.

Email: Andrew Park