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HMRC's Informant Scheme Risks Legitimising Data Theft; Financial Institutions In Firing Line - RPC

Josh O'Neill

22 December 2016

The UK's tax office has shelled out more than £460,000 ($569,649) to confidential informants in the year ended 31 March 2016 as part of an incentive-based scheme that risks legitimising data theft, according to London-based professional services firm .

RPC claimed that HMRC has been placed under increased pressure from the Treasury to crack down on tax evasion and avoidance, adding that the financial services sector could particularly be at risk, as some companies are concerned that their former employees could expose wrongdoing in exchange for monetary rewards. 

The size of an informant's payment is decided on a case-by-case basis, but will often be based on how much extra tax revenue HMRC expects to recover as a result of the information provided, RPC said.

The firm added that HMRC is “under pressure to make the most of any opportunity to increase tax yield”. Citing the Panama papers scandal earlier this year, which saw a vast amount of leaked documents enter the public domain, RPC said this could provide potential informants with an opportunity to disclose information on former colleagues or employers who may be mentioned in the documents.

“The hundreds of thousands of pounds HMRC is paying out every year to informants reflects the pressure they are under from the Exchequer to increase the tax yield,” commented Adam Craggs, a tax partner at RPC, adding: “However, there have been questions raised over whether it is right for HMRC to pay for what could be regarded as stolen data. It may encourage more data theft and create the perception that the UK government is turning a blind eye to theft.”