I'd report it, although be prepared for the council to do nothing. A local estate agent who works in the town but lives approx 13 miles away rented a place for 6 months to get their first.... of 5 children into our school.
She told people about it, it was a massive bulge year in our area and so lots of people were worried about getting any space in their local schools, let alone a preferred one. The council took the place away, she had excellent legal advice, and appealed. The council's policy was not to go to the stage after appeal (sorry, can't remember the term), so the space was reinstated.
She and her family (including the kids) openly boast about how they tricked the school. The kids (who can only have heard it from the parents) laugh about how stupid the teachers are because their parents tricked them.
A lot of people in the area didn't get their initial school place in the town and were shipped off to a failing school in the next. Only after a massive outcry was a bulge class put into one of the other schools.
It isn't victimless. They openly live 13 miles away. I have friends who have to walk their kids past our school to one further away because of her behaviour (one was first on the waiting list, so know for definite that she took friend's child's place). 5 of her children have or will take local children's places, unless they change the current sibling rule.
This is not a question of parents doing everything they can to get them into the best school. Their local school is outstanding, they just wanted the convenience of being able to drop them at school and go straight to work.
I think our council will have to change their policy at some point, because a lot of people now buy or rent to get child no.1 in, then move way out of catchment for a bigger house to get the rest in. If they changed the rule so it was siblings in catchment, children in catchment, then siblings out of catchment, it wouldn't be quite so attractive.
Yes, I probably do sound bitter and overinvested. But I'd never cheat like this, and I think it says a lot about the people who do. To those who say interfering, and nothing to do with you, I say if it was your child who lost out you'd care, and you'd be bloody glad if someone spoke up and reported their suspicions.
Actually, this is why I think everyone should have to go to their nearest primary school, as in America. It would stop all this behaviour, and hopefully, get parents to pull together to improve their local school.