HM Revenue and Customs (HMRC) has unveiled a strengthened reward scheme aimed at encouraging individuals to provide information about major cases of tax evasion. Announced in the Autumn Budget and effective from 26 November, the initiative grants financial rewards to those whose information leads to significant recovery of unpaid tax.
The Treasury’s move targets large-scale tax evasion cases, part of an ongoing effort to address losses to public finances estimated to reach £47 billion annually. HMRC hopes the scheme will prompt more members of the public to assist in tackling sophisticated tax fraud.
Overview of HMRC’s new reward scheme
The latest policy builds on HMRC’s existing whistleblower programme but raises the potential value of rewards. Individuals who report information about tax evasion that results in the recovery of substantial sums may now receive between 15% and 30% of the tax collected by the authorities.
To qualify for a reward, the information provided must directly enable HMRC to recover more than £1.5 million. This represents a significant increase in both the threshold for eligibility and the financial incentive available to those who come forward.
The enhanced scheme signals a shift towards targeting complex and high-value avoidance and evasion.
Details of the incentive structure
HMRC has stated that the actual value of any reward will vary depending on the usefulness and materiality of the information provided. Payment is not automatic; HMRC retains discretion over whether to award sums and in what amount.
Factors influencing this decision include the credibility of the evidence and the taxpayer profile involved, which usually relates to affluent individuals, large corporations, or offshore arrangements.
The new model brings the UK system closer to the whistleblower arrangements already established in countries such as the United States and Canada, where so-called “bounties” are awarded for similar disclosures.Payments from the UK scheme may run into thousands of pounds in cases involving major tax recoveries.
Eligibility and restrictions for whistleblowers
Strict criteria govern eligibility for rewards. Whistleblowers cannot qualify if they obtained the information while employed as a civil servant or if they were involved in the reported fraud.
Other exclusions apply to those required by law to disclose or not disclose the information, those reporting on behalf of someone else, and individuals submitting tips already known to HMRC or easily obtainable by routine investigation.
Furthermore, rewards will not be granted if the information was sourced from an ineligible person.
International comparisons and legal context
By expanding its incentive programme, the UK aligns more closely with established practices in North America. Both the Internal Revenue Service (IRS) in the US and the Canada Revenue Agency (CRA) operate comparable schemes, which have yielded substantial recoveries of lost government revenue.
UK law firm Leigh Day has reported increased interest from potential informants seeking information about the new system. However, experts caution that the process for claiming a reward is stringent, and prospective whistleblowers must adhere to all legal requirements to remain eligible.
Reporting procedures and protections
Informants can provide details of suspected tax fraud online via the official GOV.UK portal. HMRC requests that submissions include a clear account of the alleged evasion, its duration, how the information was acquired, and the nature of the relationship to the subject of the report.
Anonymous reporting remains an option, but those choosing to remain unidentified are not eligible for financial compensation. HMRC also warns against unsafe attempts to conduct private investigations or to alert others to the disclosure, indicating the importance of safeguarding both the integrity of inquiries and the wellbeing of informants.
Final Summary
HMRC’s strengthened reward scheme marks a significant update to the UK’s efforts to combat serious tax evasion. By offering individuals a share of the tax recovered from their disclosures, the government aims to recover greater sums lost to fraud and deter future misconduct.
While eligibility is tightly controlled and payments are made at the authority’s discretion, the hope is that the offer of substantial rewards will improve intelligence on high-value cases. As public reporting increases and the authorities face ever more complex tax evasion strategies, the initiative reflects a policy shift towards incentivising civic responsibility.
To stay informed about further changes in tax compliance and financial regulations, users can follow updates through the Pie app.
