British citizens are set to receive substantial payments for reporting serious tax evasion, after HM Revenue and Customs (HMRC) launched a strengthened whistleblower reward scheme.
The Strengthened Reward Scheme took effect on November 26 following the Autumn Budget and offers informants between 15 per cent and 30 per cent of the tax successfully recovered by HMRC.
To qualify, a report must lead to HMRC reclaiming more than £1.5million. HMRC said cases of this scale often involve high-net-worth individuals, major companies or offshore structures.
The scheme is designed to encourage members of the public to share intelligence on significant tax fraud. However, all payments remain at HMRC’s discretion and are not guaranteed even when the threshold is met.
Ministers said the initiative forms part of a wider strategy to tackle tax fraud, which costs the Treasury an estimated £47billion each year.
The new approach brings the UK closer in line with programmes in the United States and Canada where whistleblowers can receive a share of recovered tax.
Previously, UK rewards did not reflect the value of tax recouped and tended to remain modest regardless of the size of the case.
The Government believes linking incentives directly to reclaimed sums will strengthen the quality of information received from the public.
Citizens could receive huge payments for reporting serious tax evasion
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Tax avoidance and evasion worth more than £1.5million typically involves complex arrangements that HMRC cannot always detect through routine compliance checks.
The new rules set out strict eligibility criteria for those seeking a reward. Payments will not be made to individuals who obtained information while employed as civil servants or to those personally involved in the fraudulent activity.
Anyone reporting on behalf of another person, or those legally required either to disclose or withhold the information, will also be ineligible.
HMRC said it will not pay rewards where the intelligence was already known to investigators or could be identified through standard investigative processes. Informants who acquired information from someone ineligible for a reward cannot claim a payment.
Critics have said the move could ignite community tensions
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HMRC will also decline any reward where the submission could be linked to funding illegal activity. Anonymous reports remain permitted, though these cannot attract any financial payment.
Suspected tax fraud can be reported through the GOV.UK website. HMRC requests detailed information including a description of the suspected wrongdoing, how long it has been happening and how the informant became aware of it.
Reporters must also state their relationship to the individual or business involved and outline what supporting documents they possess.
Attachments cannot be uploaded directly but informants may describe any evidence they hold.
HMRC asks reporters to estimate the value of the suspected fraud and to ensure submissions are clear and comprehensible.
The tax authority warns informants not to carry out their own investigations and not to disclose to others that they have submitted a report.
The launch of the new scheme comes amid rising public engagement with HMRC’s fraud reporting services.
During 2024-25, HMRC received 164,670 reports via its fraud hotline, representing a nine per cent increase on the previous year, according to analysis by accountancy firm Price Bailey.
Despite the rise in reports, the total value of reward payments fell.
Officials aim to boost tax recoveries with bigger, targeted incentives for higher-quality intelligence
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HMRC paid £852,438 in rewards in 2024-25, a 13 per cent drop compared with 2023-24. Officials hope larger and more targeted incentives will encourage higher-quality intelligence that leads to significant tax recoveries.
Law firm Leigh Day said it has already received enquiries from people seeking clarification on how the new whistleblowing process works.
HMRC said the improved rewards are intended to stimulate greater public participation in reporting large-scale tax evasion.
HMRC have been contacted for comment.