The United Kingdom’s tax authority, HM Revenue and Customs (“HMRC”), is working on developing a program to pay awards to tax informers who provide information that leads to tax enforcement. This program is expected to be unveiled in November of this year. The Serious Fraud Office (“SFO”) is also working on developing a similar whistleblower rewards program.
The UK is developing these programs because they have seen that the US whistleblower reward programs are highly successful. A report by Royal United Services Institute (“RUSI”) Fellow Eliza Lockhart examined the success of the US Whistleblower reward programs and found that these types of programs would also be effective in the UK.
A large part of why these U.S. programs are so successful is because they offer financial awards of 10-30% of the monies collected in enforcement actions that they significantly contributed to. These award laws work because they flip the calculus on white-collar crime. Economists have long found that white-collar crime and corruption are rational economic activities, which occur when the benefits outweigh the risks of detection and penalties.
To really change the calculus on corruption, it is necessary to flip the equation on its head and make whistleblowing itself a rational economic activity. This is where whistleblower rewards are critical: they increase the benefit and decrease the risk for whistleblowers exposing the truth. These laws treat whistleblowing as an essential part of an...
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