If you go for the dobbing option, you will definitely lose your friend. No matter what you feel about her partner, it's up to her to make her own conclusions about him in her own time. I suppose it's down to what is more important to you. Her friendship or revenge on her partner that you don't approve of.
Whilst defrauding the tax-man is a crime, and one which is morally indefensible, he's probably a pretty small fish compared to big businessmen and corporations who are very clever at avoiding paying huge amounts of tax here (Apologies for being off topic, but don't get me started on BMW who received over �3billion in government cash, and still pulled out of making Rover cars in Britain).
You never know, he may turn over a new leaf, grow up and return as a fine and upstanding member of the community who is more than happy to pay his fair share of tax.
Wish, your friend luck and be there if she needs you.