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The use of incentives to encourage "whistleblowers" to alert tax authorities to bad behaviour might sound like a good idea, but beware the "Law of Unintended Consequences."
In her Spring Statement, UK Chancellor Rachel Reeves set out tax enforcement measures. However, HM Revenue & Customs (HMRC), the tax authority, has caused controversy over its plans to reward whistleblowers. Drawing comparisons to systems in the US and Canada, the proposed scheme would see insiders paid a percentage of the tax recovered based on their tip-offs. As Niall Hearty, partner at law firm Rahman Ravelli says in this article, this reward for whistleblowers is a bold step that could shake up the UK’s approach to tackling tax evasion, but it will only succeed if HMRC has the resources, expertise, and coordination to act effectively on the information it receives.
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In a bold move by HMRC, those who provide tip-offs about serious tax avoidance by companies and the wealthy could be in for a windfall.
HMRC is planning to give insiders who provide such tips a slice of the tax money that it claws back as a result. Under a government proposal, HMRC is due to begin a reward scheme for informants later this year; with the aim of targeting corporates,...
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