The UK Treasury is rolling out a multimillion-pound whistleblower reward scheme, offering up to 25% of recovered tax revenue to those who expose fraud—a move inspired by the high-stakes US model. With the UK tax gap reaching £39.8 billion, this initiative aims to incentivize insiders to report large-scale tax evasion, but experts warn of potential risks, including an influx of low-value claims.
In a bold move to combat tax fraud, HM Treasury has announced a new whistleblower reward scheme, offering individuals a share of the tax revenue recovered through their disclosures. Inspired by the well-established U.S. model, the scheme aims to incentivize insiders—including employees of multinational firms and financial professionals—to expose large-scale tax evasion and avoidance.
The UK’s current whistleblower reward system has long been criticized for its minimal payouts, with HM Revenue & Customs (HMRC) distributing just under £1 million in total last year. In stark contrast, the U.S. Internal Revenue Service (IRS) awarded $89 million (£68 million) to 121 informants in the 2022-23 fiscal year, with some individuals receiving millions for their contributions to fraud detection. The new UK framework is set to overhaul this approach, potentially offering whistleblowers up to 25% of the additional tax collected as a result of their tip-offs.
James Murray, Exchequer Secretary to the Treasury, emphasized the necessity of strengthening enforcement measures: “Tax fraud is a crime—it rips off everyone who plays by the rules. Our new approach will ensure that people have the right incentives to help tackle tax avoidance head-on.”
The government estimates that £5.5 billion is lost annually due to tax evasion, contributing to a wider £39.8 billion tax gap. The new whistleblower scheme is part of a broader Treasury strategy to tighten tax compliance, including increased funding of £1.4 billion for HMRC over the next five years.
Sir Geoffrey Clifton-Brown, head of the Public Accounts Committee, warned that the actual scale of tax fraud could be far greater than official estimates suggest: “The reported losses may only be the tip of the iceberg. To truly tackle tax evasion, HMRC must dramatically scale up its investigative capabilities.”
The Treasury’s revamped approach will provide structured, transparent compensation based on the financial impact of the whistleblower’s report. Unlike the current discretionary system—where payouts vary and are often perceived as inadequate—this reform is expected to encourage more credible and high-value reports.
While the initiative has been welcomed by tax experts, some have raised concerns about potential misuse. Andrew Park, a tax investigations partner at Price Bailey, highlighted the risks: “In the U.S., the sheer volume of reports has overwhelmed authorities, sometimes leading to unsubstantiated claims and misuse of the system.” He stressed the need for HMRC to implement robust mechanisms to ensure legitimate and actionable information is prioritized.
Additionally, ethical questions arise regarding the encouragement of individuals to report on family members or colleagues. Critics argue that without proper safeguards, the system could be exploited for personal or financial gain.
In parallel with the whistleblower initiative, the Treasury has announced changes to self-assessment tax return thresholds. The minimum trading income requiring a tax return will be raised from £1,000 to £3,000 by 2029, exempting approximately 300,000 individuals from filing annual returns. This move aims to reduce administrative burdens on small-scale traders, online sellers, and gig economy workers while allowing HMRC to focus its resources on high-value fraud investigations.
For large corporations and high-net-worth individuals, the new whistleblower scheme signals heightened scrutiny. Financial professionals handling complex tax structures will now have greater motivation to disclose illicit schemes, potentially reshaping corporate compliance strategies.
For the average taxpayer, the initiative is positioned as a step toward a fairer system—one where those who play by the rules are not left covering shortfalls created by fraudulent activities. However, its success will depend on effective implementation, sufficient resourcing for HMRC’s investigation teams, and striking the right balance between incentivization and ethical oversight.
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