The service will enable the public to report any kind of tax fraud and evasion, including PAYE and National Insurance, undisclosed offshore investments, non-payments of the National Minimum Wage, tax credit fraud and VAT fraud.
Jennie Granger, HMRC’s director general for customer compliance, said, "Information provided by the public is a crucial element of HMRC’s work to close the tax gap, so it’s vital that the reporting process is as simple and accessible as possible.
“The HMRC Fraud Hotline will form an important part of our intelligence gathering operations to bring in more money for the exchequer and the country.
"We encourage the public to continue to work with us and report any suspected fraud or evasion to us for investigation."
HMRC said that it received 113,000 reports from the public providing information to the department.
But the Revenue is still losing £5.2bn in revenue every year to tax evasion, according to its latest Measuring tax gaps report.
Meanwhile, consulting firm RSM estimates the losses are considerably higher, when it includes the so-called hidden economy. Its research found that evasion and the hidden economy combined are costing the UK £11.4bn a year.
HMRC explained that, while tax evasion is when a declared net source is deliberately understated, the hidden economy means an entire source of income is not declared. A spokesperson said these were “two entirely different things”.
According to its report, the tax gap, which is the difference between the amount of tax that should be collected by HMRC, against what is actually collected, currently stands at £36bn or 6.5%. However, tax avoidance is at its lowest level ever, at £2.2bn.
George Bull, senior tax partner at RSM, said, “It is therefore reasonable to ask why HMRC does not have the resources to bear down on tax evasion and the hidden economy in the same way that it has successfully tackled tax avoidance.”
The HMRC Fraud Hotline - on 0800 788 887 – is open every day between 8am and 8pm, including weekends.