Businesses and employers have always been encouraged to be proactive in making disclosures to HMRC. However, recent reports indicate that there has been a huge increase in reporting and whistleblowing, specifically in relation to furlough fraud and the Self-Employment Income Support Scheme (SEISS).
Last month, HMRC released its corporate report on whistleblowing revealing that, during the reporting period 1 April 2021 to 31 March 2022, HMRC received over 15,000 whistleblowing disclosures, of which over one in three required further action. Such disclosures were made through HMRC's fraud hotline, relating to both furlough fraud breaches, as well as breaches of National Minimum Wage responsibilities by employers. This is a clear increase from the number of reports received over the last two years (previously 13,640 for 2020 to 2021 and 8,892 for 2019 to 2020 respectively).
The increase in reporting is unsurprising, particularly in light of HMRC's post-pandemic mandate to recoup monies that have been obtained fraudulently. A few months ago, HMRC confirmed in reports that it had received almost 14,000 whistle-blower reports relating to furlough fraud alone, which may be a result of the creation of its Taxpayer Protection Taskforce, as well as the influx of nudge letters issued. In fact, reports indicate that in 2021-22, 9,600 nudge letters were issued to employers relating to furlough scheme payments and almost 54,000 letters were issued to employees relating to SEISS.
The latest corporate report emphasised HMRC's interest in information received from employees who have "concerns" about their employer, and its intention to clamp down on "those who try to cheat the system through evading taxes and/or failing to pay the minimum wage to which their employees are legally entitled". The potential sums lost to fraud and errors over the last few years are estimated to be in the billions, and it is likely that HMRC will continue to rely upon and encourage whistleblowing and disclosures from employees as a means of tackling fraud. It is therefore imperative that employers take the time to review issues and make pre-emptive disclosures on issues that may otherwise give rise to significant penalties.