Whistleblowers could earn millions as HMRC targets tax fraud
US-style incentive scheme expected to be announced at Budget later this month
Whistleblowers of large-scale tax fraud will soon start to receive millions of pounds in exchange for information under a new US-style incentive programme that is the first of its kind in the UK.
HM Revenue & Customs is set to launch the reward scheme later this month and could pay as much as 30 per cent of any taxes collected as a result of tip-offs from informants, according to people with knowledge of the situation.
Details of the programme, including the final reward cap, are expected to be announced at the Budget on November 26, the people said.
The move will be welcomed by whistleblowers who often suffer financially after coming forward about wrongdoing, while also strengthening the government’s ability to clamp down on tax fraud.
“By providing a financial safety net for whistleblowers in the form of monetary rewards, HMRC is poised to supercharge its enforcement capabilities,” said Mary Inman, a US lawyer at the specialist law firm Whistleblower Partners.
“Well-placed, financially motivated whistleblowers and their lawyers will be force multipliers for the UK’s efforts to fight tax fraud.”
The incentive scheme is just one of the measures chancellor Rachel Reeves is pursuing as she seeks to fill a fiscal hole in the UK’s finances estimated by economists at between £20bn and £30bn. The government loses about £47bn a year from unpaid taxes.
HMRC estimates that tax evasion cost £5.5bn in lost revenue in 2022-23, but that number is believed to be vastly underestimated.
When the Treasury first announced plans for an incentive scheme in March, it explicitly said it would “take inspiration from the successful US and Canadian ‘whistleblower’ models”.
HMRC officials met a range of US agencies that have similar programmes over the summer, including the US Internal Revenue Service, to learn more about how they operate, said two people with knowledge of the meetings.
Since 2007, the IRS has awarded $1.3bn to whistleblowers from $7.4bn in missed taxes collected as a result of their information, according to its annual 2024 report. It offers between 15 per cent and 30 per cent of taxes recouped to successful whistleblowers, involving cases with a minimum $2mn government recovery.
The scheme will mark a significant departure from the UK’s approach to whistleblowing, which has traditionally opted against such large-scale rewards, instead taking the view that people should do the right thing without a financial incentive.
Lawyers and prosecutors, including the director of the UK’s Serious Fraud Office, have long called for a reward programme to increase the number of successful prosecutions for economic crime in Britain.
While some small financial incentive programmes already exist, including at HMRC and the UK Competition and Markets Authority, they are not well publicised and the rewards are small.
HMRC paid out less than £1mn to whistleblowers in 2023-24. By comparison, the largest single reward paid out by the Securities and Exchange Commission was $279mn in 2023.
The new scheme will run in parallel with the old programme and will target higher-value tax fraud, the people said.
HMRC may also benefit from whistleblowers outside the UK as US agencies pursuing economic crime are experiencing staff shortages under President Donald Trump’s administration, said Inman.
A spokesperson for the Treasury declined to comment on “speculation” around any changes ahead of the Budget.