Rick I don't know about America but, in the UK, there is no legal obligation to report someone for committing an offence, and failing to do so would not give rise to a cause of action in civil proceedings.
paco If
'most of the legislation is possibly invalid', nobody's noticed yet. Please don't say this again on a public forum - if it turns out you're right, I'll be out of work.
Allocation of funds or not, the CAA spends truly fantastic amounts of money investigating and prosecuting people, often for trivial offences which would be better not prosecuted. When investigating/prosecuting, the CAA acts in a care-free 'money no object' manner and (in stark contrast to any other law enforcement agencies/prosecuting authorities I've experienced in my career) doesn't appear to pay the slightest regard to the cost involved or proportionality of response.
The frequent criticism in the industry is that the Authority seems very enthusiastic about prosecuting trivia whilst allowing more serious matters to escape their attention. I think there's much force in that criticism.
Most of us in or associated with the industry know the illegal public transport and 'bent charter' offenders so it seems very unlikely the CAA is unaware of them. I've never understood why they pursue trivia/minor infringements with such enthusiasm and don't take action against the well-known offenders. Evidence would be very easy to obtain if they went about it the right way.
(On a completely separate point - did you work at the now defunct Wessex Helicopters in the mid 90's? I flew a Bell47 there once years ago and think we may have met.)