And finally… HMRC hands out hundreds of thousand of pounds to tipsters who report tax-dodging spouses

Thousands of pounds have been paid by the taxman to people who have tipped-off the authorities about how their spouses or employers are dodging their taxes.

According to The Times newspaper, HM Revenue & Customs investigators handed over more than £2.2 million tax-free of taxpayers’ money for such information over the past five years, but the payments were not declared in official annual accounts.

The report claims the payments have been made as the HMRC desperately tries to close an annual £33 billion “tax gap”, which constitutes the 5.7 per cent of tax that the department says people and businesses fail to pay.

The payouts for tip-offs were revealed by Sir Amyas Morse, head of the public spending watchdog the National Audit Office.

Sir Amyas said that HMRC’s risk and intelligence service, run by officers who have powers to examine avoidance, evasion and fraud, funds the payments.

He said HMRC was able to provide the awards under the Commissioners for Revenue and Customs Act 2005. Payments do not have to appear in the annual accounts because they are not a “key performance metric”.

HMRC has handed out £2.23 million since 2013. Tax office figures show that £343,500 was paid out in the 2017-18 tax year; £421,460 in 2016-17; £460,433 in 2015-16; £604,800 in 2014-15, and £402,160 in 2013-14.

However, The Times report quotes a former HMRC employee who voices concerns that the scheme was “totally lacking in transparency” and could be abused by individuals engaged in vendettas.

The source told the paper that many payments were made to embittered former spouses, business partners and employees.

Adam Craggs, a partner at the law firm Reynolds Porter Chamberlain, and who worked at HMRC for 16 years, said that colleagues in the risk and intelligence service told him many of the people seeking payment were involved in personal relationships with those they were informing on.

“You would get a disillusioned spouse who said that they were upset with their husband and would give details to HMRC,” he said. “They knew where the bodies were buried, as it were.”

Mr Craggs said the level of payments was always shrouded in secrecy. “It is not a transparent process and it is, to a certain extent, open to abuse for those with vested interests. Public money is being paid to informers — your money and my money.”

HMRC says informers get a payout only if their information is considered “exceptionally helpful” to an investigation, and most handouts are for less than £5,000, which must be authorised by a senior officer in the intelligence service.

Payments up to £10,000 require sign-off by a high grade civil servant, while payments of up to £100,000 must be approved by a deputy director, and up to £250,000 by a director. Payments over £250,000 would have to be approved at director-general level.

A source at HMRC said that a tipster would only get £250,000 if they provided “mother-lode material”, adding: “It would have to be enough to close down a company, or something.”

An HMRC spokesman, who confirmed that all payments for tip-offs were tax-free, said that the “vast majority” of tipsters did not get a reward, but those who got one would be given it “at the discretion of HMRC”.