The public could receive cash rewards for informing on people defrauding the Government, including those involved in VAT and Customs scams, under proposals published by the Home Office yesterday.

Informers would be given a share of the assets confiscated by the courts if they turn whistleblower against people involved in a range of criminal activities, such as cigarette and liquor smuggling.

Home Office officials are considering whether a “strikingly successful” scheme in the United States – which has raised $11 billion (£5.5 billion) since 1986 – could be adopted in Britain.

In America informants receive 15-30 per cent of seized assets in a successful case.

The proposal is part of a wide-ranging plan aimed at improving the Government’s ability to seize criminal assets. It is hoped that £1 billion will be taken in “reasonable time”.

But the extent of the task was revealed by Alan McQuillan, director of the Assets Recovery Agency, who said that many big-time criminals were now “prudent investors”.

In addition to luxury cruises and a generally lavish lifestyle, Mr McQuillan said that many now invested “very carefully in property, shareholding and pensions plans”.

Referring to the US initiative, Vernon Coaker, a Home Office minister, said: “We are asking is it applicable in this country, is it something that people would find acceptable and is there a workable model?

“We think it would be irresponsible for us as a Government not to look at what people are doing overseas.”

Under the US False Claims Act, known as “Qui Tam”, anyone who becomes aware of a fraud – even one committed in the past – is allowed to launch a legal claim on the Government’s behalf. Since 1986, there have been more than 5,000 actions and whistleblowers have received almost $1.8 billion in cash.

The Home Office consultation paper said: “It has been estimated that for every dollar the federal Government invests in investigating and prosecuting these cases, it receives $15 back.

“The US Department of Justice believes that the False Claims Act and Qui Tam is an unarguable success. These provisions have been strikingly successful, particularly in defence and healthcare sectors, with many billions of dollars raised annually.”

Yesterday’s consultation also lists other proposals aimed at increasing confiscations, including new powers to seize so-called “bling” items such as jewellery and plasma TVs.

One proposal would give police and other law enforcement agencies the power to seize high-value goods as soon as a suspect is charged. Items would be held pending a trial and eventually sold.

The paper also proposed removing the current 12-year time limit which applies to the Assets Recovery Agency’s ability to confiscate property under civil recovery laws.

Seizures have increased fivefold in the past five years, Mr Coaker said. He added that the Home Office’s latest target was for £250 million to be seized by 2009-10.

The Assets Recovery Agency was described as a mess earlier this year after the National Audit Office said that it had cost £65 million to run but had seized only £23 million from criminals. Mr McQuillan said that for the first time it had reclaimed more cash than it received from the public purse.

The agency’s annual report showed that £15.9 million was seized last year, compared with the £15.5 million it cost the Treasury.

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