Tip-offs to HMRC’s Tax Evasion Hotline hit almost 300 calls per day over the last year

· 72,000 reports in the last twelve months

· Calls rarely lead to extra tax revenue and can embroil businesses and individuals in unnecessary investigations

 HMRC’s Tax Evasion Hotline received 72,000 tip-offs over the last year – roughly 300 calls per day - according to our survey. The high volume of calls reflects the public’s increased concerns over tax evasion. The Tax Evasion Hotline lets members of the public and businesses inform HMRC of suspected cases of tax evasion.

Martin Casimir, Managing Director of Bloomsbury Professional, comments: “The sheer volume of calls to the hotline is astounding. People are clearly keen to ensure that no-one cheats the tax system and that everybody pay their fair share of tax.”

“For many people, wages have flatlined in real terms over the last few years whilst at the same time the tax burden has increased. That makes them especially indignant and motivated to call the helpline if they suspect tax evasion.”

Calls rarely lead to extra tax revenue

Although the volume of calls to the Tax Evasion Hotline is extremely high, it does not necessarily mean that large amounts will subsequently be recouped through investigations.

Martin Casimir explains: “HMRC is already on a stretched budget. There’s a question mark over whether HMRC has the manpower to deal with all the complaints that it receives.”

Casimir says that HMRC would not disclose how many of the calls they received directly led to successful investigations into tax evasion. However, he believes the figure is likely to be extremely low.

The National Audit Office has identified the Tax Evasion Hotline as the least cost-effective method of detecting tax evaders. It yields just twice the amount of money it costs to operate it. In 2006/7, HMRC took back just £2.6 million from calls made to the Hotline. The original estimate was £32.5 million that the helpline had hoped to recoup.

Martin Casimir comments: “HMRC should be concerned about how few calls actually reveal a tax evasion case of note.”

“Whilst people are now more sensitive to the possibilities of any tax irregularities, it can lead to people being over-keen and making calls that are misguided.”

As well as HMRC being unable to deal with the sheer volume of calls, many of the calls it receives reveal only small amounts of tax evasion.

Martin Casimir says: “It’s a rarity that calls to HMRC reveal a large-scale evasion of tax. Many of the calls relate to tradesmen being asked to be paid cash-in-hand, for example. The loss of tax for HMRC is rather small.”

“Investigating tax evasion cases can be a costly procedure so HMRC has to weigh up the benefit of the amount of tax they can potentially reclaim versus the cost of actually pursuing the tax.”

“It is also worth remembering individuals or businesses that are found not to owe any additional tax are usually not entitled to compensation so fighting unfounded tax investigations can be a costly nuisance.”

Press enquiries:

Martin Casimir
Managing Director
Bloomsbury Professional
Tel: +44 (0)1444 416119

Nick Mattison or William Bray
Mattison Public Relations
Tel: +44 (0)207 6453636

Written by Ellie MacKenzie

Blog Archives

BPro Tax

Tax Online

Online access to Bloomsbury Professional books, looseleafs and journals, across numerous practice areas. Free Trial

Need Help?

Bloomsburyprofessionallaw If you need any help with finding publications or just ask a question. Talk to an Advisor: 01444 416119
or send us a message