UPDATE: HM Revenue & Customs (HMRC) is poised to unveil a groundbreaking whistleblower rewards scheme that could allow informants to earn millions of pounds as early as November 26, 2023. This new initiative aims to combat rampant tax fraud, offering whistleblowers up to 30% of recovered taxes, potentially making them some of the wealthiest citizens in the UK overnight.
The proposed scheme, the first of its kind in the UK, targets large-scale tax evasion that HMRC estimates cost the Treasury £5.5 billion in the fiscal year 2022-23. Experts warn that the actual losses could be significantly higher. “By providing a financial safety net for whistleblowers in the form of monetary rewards, HMRC is poised to supercharge its enforcement capabilities,” stated Mary Inman, a US lawyer at Whistleblower Partners. She emphasized the importance of financially motivated whistleblowers as essential assets in the fight against tax fraud.
This initiative is part of Chancellor Rachel Reeves‘ broader plan to address a staggering fiscal shortfall estimated between £20 billion and £30 billion. The UK currently loses around £47 billion annually due to unpaid taxes, and this new program aims to recoup some of these funds for the public sector.
In a strategic move, HMRC has sought inspiration from the United States, holding discussions with the Internal Revenue Service (IRS) over the summer. Since 2007, the IRS has paid out $1.3 billion to whistleblowers from $7.4 billion in recovered funds, offering between 15% and 30% of taxes reclaimed for cases involving at least $2 million in recovery.
Historically, the UK has shied away from large financial rewards, relying instead on the principle that individuals should report wrongdoing without monetary incentives. However, pressure from legal experts and prosecutors—including the director of the Serious Fraud Office—has mounted in favor of such programs, asserting they are vital for strengthening prosecutions related to economic crime.
Currently, HMRC’s existing whistleblower schemes offer minimal compensation, with total payments in 2023-24 falling below £1 million. This figure pales in comparison to the $279 million awarded by the US Securities and Exchange Commission during the same timeframe.
The proposed scheme will focus on high-value fraud while running alongside HMRC’s existing smaller initiatives. Analysts suggest that the UK might attract whistleblowers from outside its borders, particularly as US agencies face staffing challenges.
As anticipation builds ahead of the Budget announcement, a Treasury spokesperson declined to comment on what they described as “speculation.” However, the urgency of this initiative could reshape the landscape of tax enforcement in the UK, providing significant financial incentives to those willing to expose fraud.
Stay tuned as we monitor this developing story, which promises to have immediate implications for taxpayers and the UK economy.
