The government has recently announced that a new reward scheme will be established this year to encourage informants to report tax fraud to HMRC.
While the exact details are yet to be made public, it is intended that the new scheme will draw on the so-called ‘whistleblower’ models used by the US and Canadian tax authorities to complement HMRC’s existing reward scheme and target serious non-compliance by large corporates and wealthy individuals.
HMRC currently offers discretionary rewards to informants, but publicly available information on the criteria used to determine eligibility and calculate payments is extremely limited.
Available data suggests that total payments of around 1mn were made in the 2023/24 tax year. This is a relatively modest sum.
In contrast, the US and Canadian schemes are significantly more generous, underpinned by clearly defined eligibility criteria and transparent operational policies.
The US and Canadian schemes offer fixed-percentage rewards based on the amount of additional tax recovered as a result of information provided by the whistleblower.
As a result, the financial incentives can be substantial. For example, in 2024, three US whistleblowers shared an award of $74mn after their disclosures led to the recovery of $263mn in unpaid tax.
Whether the new UK scheme will be as generous remains to be seen, but the government has confirmed that rewards will be “significant”.
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