Whistleblowing reports to HM Revenue & Customs went up by 70% in the past two years, according to a Freedom of Information request made by law firm Pinsent Masons.
This was in large part driven by people reporting abuse of the government’s furlough scheme, it said.
HMRC received more than 15,000 reports from whistleblowers in the 12 months up to 1 April 2022, up 13,600 on the previous year. In the year before the pandemic, the number of reports was just 8,900.
Since January 2021, the tax office has made public the names of any businesses that claimed wages via the Coronavirus Job Retention Scheme, or furlough, and has encouraged people to report anonymously if fraud is suspected.
The firm found that 38% of whistleblowing reports last year were deemed serious enough to warrant further action, with 5,800 cases followed up.
Earlier this year, another investigation by the firm revealed that by this summer, HMRC had received 13,775 reports about fraudulent use of the furlough scheme.
One major case involved a fraudster in India claiming £27.4m in furlough payments over 14 months, after registering four companies in London with 2,700 non-existent employees.
“A combination of factors from public outrage over furlough fraud, to individual employee disgruntlement, has led increasing numbers of workers to report their employers to HMRC on a scale we haven’t seen before,” said Andrew Sackey, tax fraud investigations partner at the firm.
“It is vital that corporates thoroughly check that their managers respected the rules of the various furlough schemes, by their actions and not just by the top level messaging that was in place at the time. There is an ongoing risk that a rogue manager abused of the system without the knowledge of the centre – and a disgruntled employee (or ex-employee) could report the business for it.
“We would therefore recommend any company concerned that they may have uncovered wrongly-claimed furlough payments to seek professional advice. Any rule breaches disclosed voluntarily are likely to be easier to deal with and should result in lower penalties than if HMRC discovers them through one of the increasing number of whistleblower reports.”
An HMRC spokesperson told the FT: “Clamping down on those who try to cheat the system is a key priority for us. We are committed to ensuring that the tax system and labour markets operate fairly, efficiently and within the law.”
The government’s furlough scheme was in place from April 2020, at the start of the coronavirus pandemic, and eventually withdrawn on 30 September 2021.
During that time, employers were able to claim 80% of an employee’s usual wages up to £2,500 per month from the government scheme.