Accountants criticise £1.4m bonuses to tax inspectors

THE PAYMENT of £1.4m in bonuses to tax inspectors since 2008 may create a conflict of interest in criminal tax investigations, a senior accountant has warned.

Official figures showed that in 2008/09, a total of £379,656 was paid in bonuses to inspectors involved in criminal investigations, followed by £435,689 and £349,168 in the following two years.

In the current 2011/12 year, £275,326 has been paid to officials in criminal investigations.

Treasury minister David Gauke said that the final figure for the current year will not be available until the end of the financial year.

Two different schemes operate for HM Revenue and Customs (HMRC) officials working on criminal investigations. One is a performance award tied to annual work. The second, for staff excluding the senior civil service, is for “exceptional in-year performance”.

Previously, HMRC had denied that tax inspectors were paid bonuses, tax experts said.

The figures have emerged as HMRC attempts to meet tough for criminal investigations. The Treasury hopes to deliver a five-fold increase in criminal prosecutions for tax evasion by 2015, backed by an additional £917m in funding for HMRC.

Richard Mannion, national tax director at Smith & Williamson, said he was concerned that the bonus payments could create a conflict of interest by encouraging inspectors to pursue questionable investigations against taxpayers in order to boost tax receipts and qualify for a bonus.

“I hope that checks and balances are working [in the bonus scheme],” Mannion said.

John Whiting, tax policy director at the Chartered Institute of Taxation, said he had no problem with tax inspectors getting bonuses for good performance. However, he added that if bonuses are “tied too simplistically” to the amount of money tax inspectors raise from investigations it could “raise problems”.

He also said that the rules for bonus payments should be easy to understand.

HMRC were unavailable for comment.