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More neighbours are turning in suspected tax evaders

More neighbours are turning in suspected tax evaders

Tens of thousands of people turned in friends, family and neighbours for suspected tax evasion last year.

More than 40,000 calls were made to HMRC’s tax evasion hotline in 2017/18. This was more than double the amount received the year before. These calls resulted in HMRC paying out £343,500 in rewards to informants.

£30 billion recovered

HMRC is unable to provide a figure of how much tax was collected as a result of those tips, as reports were not often standalone. But it said it has recovered more than £30 billion through its efforts to tackle error, avoidance and evasion.

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Fiona Fernie, a dispute specialist at accountancy firm Blick Rothenberg, explained that calls to the hotline would cover a variety of things. “You will get people reporting VAT fraud on art – that can be multi million pounds – the local builder who is getting paid cash in hand, the structures offshore where people are hiding their money,” she told Telegraph Money . “Then there will probably be vindictive people who just think their next-door neighbour has a bit too much money.”

Greater incentives for information

According to Fernie, HMRC has upped the ante in getting people to report suspicious activity. “In the past they have used a carrot to encourage people to come forward,” she said. “The days of the carrot are over, now they’re using a whopping great stick. But if you can use a carrot to get someone to tell on their neighbour, why wouldn’t you?”

Last year, HMRC replaced its Tax Evasion Hotline and Customs Hotline with a new combined Fraud Hotline. This merger is thought to have boosted the overall response. Fernie added that increased political and media pressure in relation to tax evasion and avoidance, as well new legislation and programmes like Panorama, have made people more conscious than ever before.

Still work to be done

But despite its efforts, the Treasury still missed out on an estimated £14 billion in lost revenue to deliberate non-compliance.

The gap was made up of eight factors. These were failure to take reasonable care (£5.9 billion), criminal acts (£5.4 billion), tax evasion (£5.3 billion), legal interpretation (£5.3 billion), non-payment (£3.5 billion), error (£3.2 billion), hidden economy (£3.2 billion) and, finally, tax avoidance (£1.7 billion).

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