A Major Shift in UK Tax Enforcement

The UK is preparing for one of the most significant changes to its tax-enforcement framework in decades, with the government announcing a new whistleblower reward scheme designed to incentivise individuals to report serious tax fraud and avoidance. The reform represents a decisive shift toward a more US-style model, where whistleblowers can receive substantial financial rewards for information that leads to successful recovery of unpaid tax.

Historically, HMRC has operated a discretionary reward scheme under the Commissioners for Revenue and Customs Act 2005. Payments have been modest by international standards, with whistleblowers receiving just under £1 million in total in 2023–24. These rewards have never been linked directly to the amount of tax recovered, and HMRC has generally emphasised that information is provided out of public spirit rather than financial motivation. 

The newly announced scheme changes that landscape entirely. It is aimed at tackling large-scale, high-value non-compliance, including corporate tax evasion, sophisticated offshore structures, and wealthy individuals involved in aggressive tax practices. Under the proposed model, whistleblowers could receive a percentage of the additional tax, interest and penalties recovered, creating a far stronger incentive for insiders with valuable information to come forward. While the government has yet to publish the final percentage range, early policy briefings suggest that the UK could adopt bands similar to the US system, where rewards typically fall between 15% and 30%. 

The government argues that this policy will help close the tax gap—currently estimated at billions of pounds annually—by making it more likely that serious wrongdoing is exposed. Incentivising individuals with direct knowledge of misconduct, particularly within large corporations, is expected to enhance HMRC’s ability to detect complex fraud schemes. 

However, the policy brings clear challenges. An increase in financial incentives may encourage a surge in low-quality or malicious reports, straining HMRC’s already limited investigative resources. There are also concerns about ensuring adequate protections for whistleblowers, who may face retaliation or legal risks despite existing safeguards under the Public Interest Disclosure Act. Businesses, meanwhile, may need to strengthen compliance programmes and internal reporting processes to mitigate the risk of harmful disclosures.

If implemented effectively, the scheme could transform the UK’s approach to tax enforcement. By aligning rewards with recoveries, the government hopes to shift the balance decisively against sophisticated tax evasion. But success will depend on careful design, robust oversight, and clear protections for those brave enough to become whistleblowers.