Introduction: A New Era for UK Tax Compliance
The United Kingdom is embarking on a landmark transformation in its fight against tax evasion and fraud.
Using a similar model akin to the United States IRS Whistleblower Program, His Majesty’s Revenue and Customs (HMRC) announced March 2025 a new, enhanced informer and whistleblower program, representing one of the most significant policy shifts in UK tax enforcement history.
On November 26, 2025, the HMRC announced that it will be rewarding whistleblowers if the information they provide leads to the collection of at least £1.5 million in tax (excluding penalties and interest). However, rewards are still given at HMRC’s discretion and are not guaranteed.
What is the New HMRC Scheme?
At its core, the new program is a fundamental redesign of how the UK government incentivizes individuals to report wrongdoing. It’s central purpose is to motivate individuals with high-quality, inside information to come forward by offering them a substantial financial stake in the outcome with no upper cap.
The program is specifically designed to tackle the “tax gap”—the difference between the amount of tax owed and the amount actually collected, which was estimated at £46.8 billion for the 2023/24 fiscal year. By offering significant rewards, HMRC aims to uncover “serious non-compliance in large corporations, wealthy individuals, offshore and avoidance schemes” that are otherwise incredibly difficult to detect.
Why Enhancements are Needed Now!
There are many reasons why enhancements are urgently needed. The existing UK system, governed by the Commissioners for Revenue and Customs Act 2005, has long been criticized as ineffective for high-value cases.
Under this “old” model: rewards are purely discretionary. Meaning, HMRC has no obligation to pay. Not only that, payments are also minimal and the amounts are not tied to the tax recovered. In the 2023/24 fiscal year, HMRC paid out a total of just £978,256 to all informants combined, which is miniscule with the estimated tax gap lingering around 5.3% year-over-year.
Secondly the current program is opaque: there is little publicity and no clear framework for how rewards are calculated. This system provides little to no incentive for a high-level executive, banker, or accountant to risk their career, reputation, and livelihood to expose a multi-million-pound tax fraud.
The new scheme is a direct answer to this failing, providing a clear, compelling financial and procedural reason for individuals to blow the whistle. It acknowledges that to catch the biggest tax cheats, the government must offer more than just a token “thank you.”
Latest Reform: The Strengthened Reward Scheme
On November 26, 2025, the HM Treasury announced the new program, the Strengthened Reward Scheme, which supplements the existing 2005 Act, creating a new, parallel path for high-value tax fraud and evasion claims. Tax avoidance or evasion of this size normally involve:
- Large companies
- Wealthy individuals
- Offshore or tax avoidance schemes
These changes are not mere “tweaks,” but represent a complete ideological overhaul designed to build trust and deliver concrete results, much like what the IRS in the US has reported. According to the HMRC’s public announcement on November 26, the scheme includes the following enhancements:
- A US-Style Reward Range: The single most important change. Whistleblowers can qualify for a reward of between 15% and 30% of the tax collected, if the information they provide to HMRC leads to the collection of at least £1.5 million in tax; excluding penalties and interest.
- No Upper Cap: The reward will be tied to the recovery, not limited by an arbitrary cap, meaning a tip-off that recovers £100 million could result in a multi-million-pound reward for the whistleblower.
- Published Qualification Factors: The new scheme will provide clear, published guidelines on what constitutes a qualifying disclosure and the factors used to determine the final reward percentage (e.g., the quality of the information, the degree of assistance).
However, not ever whistleblower is eligible for rewards. Below are a few reasons for immediate reward denials:
- You are or were a civil servant (or contracted to work in the government) and got the information while you were employed.
- You are the taxpayer involved in the tax evasion or avoidance, or you planned and started the actions that led to the tax evasion or avoidance.
- The information you provide may already be known to HMRC or could have been identified through routine processes.
- The reward might directly or indirectly lead to funding illegal activity.
- You are required by law to disclose, or not disclose, the information.
- You are acting on behalf of someone else.
- You got the information from someone who would not have been eligible for a reward themselves.
- You are providing the information anonymously (anonymous submissions will be accepted but no payment will be made).
Mirroring the US IRS Program
As previously stated, but critical to keep in mind, is that the new HMRC scheme is openly “modelled on” the US Internal Revenue Service (IRS) Whistleblower Program, which has been operational since 2007. This comparison is the clearest way to understand the scale of the UK’s new enhancements.
Reward Structure
The IRS whistleblower program is a proven success. It mandates an reward of 15% to 30% of the collected proceeds if the case involves more than $2 million. The new Strengthened Reward Scheme launched on November 26 adopts a similar 15-30% range. It signals to potential whistleblowers that the UK is now equally serious about rewarding high-value information.
To put how effective these programs are into perspective…
Since 2007, the IRS program has recovered over $7.4 billion in unpaid taxes based on whistleblower tips, paying out $1.3 billion in rewards. The largest single reward from the related US Securities and Exchange Commission (SEC) program was a staggering $279 million, which was granted to a whistleblower in 2023.
Mandatory Payments
Rewards are given at HMRC’s discretion and are not guaranteed. The program does not yet have the full mandatory power of the US law, making the role of legal counsel even more important in the UK. In the US, the reward is a “by right” entitlement, which means if a whistleblower meets the statutory criteria and their information leads to a recovery, the IRS must pay – no further investigating or questions asked.
Whistleblower Protections
In the US, whistleblowers are protected by major federal anti-retaliation laws, such as the Dodd-Frank Act and Sarbanes-Oxley Act, which the advocates at IWA were intimately involved in creating. Agencies like the SEC, which deal with securities fraud cases, have the authority to take action against any person or organization retaliating against a whistleblower. This means imposing fines and other penalties.
Unfortunately, UK whistleblower protection currently relies on the Public Interest Disclosure Act 1998 (PIDA). PIDA is widely seen as weaker because it places the burden on the individual to bring a complex and costly case against their employer in an Employment Tribunal. For the new HMRC scheme to be truly successful, many experts believe it must be paired with US-style, government-enforced anti-retaliation protections.
Qualifying for An Reward and Protections
Qualifying for an reward under the new scheme will require more than just a simple tip-off. The information must be original, specific, credible, and not publicly known. There must be a strong causal factor in HMRC’s decision to open an investigation and must lead directly to the collection of unpaid tax. It’s important that whistleblowers not let anyone know they are making a report or encourage anyone to commit a crime to get more information.
The most crucial aspect for a potential whistleblower to understand concerns the nature of the reward. Rewards are given at HMRC’s discretion and are not guaranteed.
Because of this, whistleblowers and their legal counsel should seek to obtain a formal written agreement with HMRC regarding the payment of a reward.
This step is critical. Verbal assurance is not enough.
A formal, written contract—negotiated by experienced legal counsel before the full disclosure is made—could transform the reward from a discretionary “if we feel like it” payment into a binding, mandatory obligation on HMRC. This agreement would outline the terms of the cooperation, the basis for the reward calculation, and the conditions for payment, providing the whistleblower with the security and certainty needed to proceed.
This contractual approach is a vital strategy to bridge the gap between the UK’s discretionary legal foundation and the “by right” system that has proven so effective in the US.
The Steps for Sending a Report to HMRC
Individuals or entities possessing knowledge of deliberate tax evasion may submit a formal disclosure to Her Majesty’s Revenue and Customs (HMRC). This process is strictly confidential and offers the option of anonymity.
Submission Requirements
The reporting form requires specific details. Note that you cannot upload attachments; however, you should indicate if you possess supporting evidence. Please ensure your submission is clear, detailed, and adheres to the following parameters:
- Nature of the Activity: A description of the alleged fraud (Maximum 1,200 characters).
- Source of Knowledge: How you acquired this information.
- Relationship: Your connection to the suspect (business or individual).
- Duration: The timeframe over which the activity has occurred.
- Financial Impact: The estimated total value of the unpaid tax.
- Evidence Description: A summary of documents or proof you hold (Maximum 500 characters).
Post-Submission Protocol
Upon submission, you will receive an acknowledgement receipt. Please adhere to a strict “no contact” policy regarding updates; HMRC does not provide status feedback on investigations. Do not submit duplicate reports on the same issue. HMRC will only initiate contact if further clarification is required or to arrange a reward payment, should eligibility criteria be met. Be advised that investigations are lengthy, and reward processing can take several years.
Empirical Evidence to Program Effectiveness
This new HMRC policy is not a gamble; it is an evidence-based decision supported by overwhelming empirical data on the effectiveness of financial incentives.
The reforms are fully supported by major studies in both the US and the UK, including the UK’s Royal United Services Institute (RUSI) report by Eliza Lockhart, “The Inside Track: The Role of Financial Rewards for Whistleblowers in the Fight Against Economic Crime.”
This landmark investigation reviewed the US and Canadian programs specifically to inform UK policy. Its findings were conclusive:
- Rewards Work: Financial rewards are empirically proven to “drive greater insider reporting” and provide “actionable intelligence” that is otherwise unobtainable.
- Deterrence Effect: The programs create a powerful “economic crime deterrent effect,” as potential fraudsters must now fear their own employees, bankers, and accountants.
- Levels the Playing Field: Rewards are essential for “levelling the playing field.” They enable whistleblowers to hire specialized legal counsel on a contingency (no-win, no-fee) basis, giving them the resources to stand against powerful corporations.
- A Key Caveat: The RUSI report’s first observation is critical: rewards are a “regulatory tool” and “cannot… in isolation” solve the problem. They must be implemented as part of a comprehensive framework that includes robust anti-retaliation protections.
The RUSI report builds on a decade of US research. A foundational 2010 study, “Who Blows the Whistle on Corporate Fraud?” by Alexander Dyck provided a clear answer: monetary incentives are a game-changer.
The study found that fraud detection relies on a “village” of actors, including employees. It then compared employee reporting in different US industries.
In the healthcare industry, where the qui tam (False Claims Act) law allows employees to file lawsuits on behalf of the government and receive a large financial reward, 41% of fraudulent activity exposed by employees. In all other industries without such a direct financial incentive, employees exposed only 14% of fraudulent activity.
This stark 27-point difference provides indisputable proof that a direct, substantial financial stake dramatically increases the likelihood that an insider will come forward.
Conclusion
The new HMRC informer and whistleblower scheme is a landmark shift in UK policy. It displays a move away from a hopeful, discretionary system to a powerful, pragmatic program that recognizes a simple truth: to catch the most sophisticated tax cheats, you must incentivize those who know their secrets.
By modeling its program on the successful US system, HMRC is poised to unlock a flow of high-value intelligence that could recover billions for the UK taxpayer. As empirical evidence from RUSI and US studies shows, these financial rewards are the key to motivating insiders and creating a powerful deterrent.
However, the program’s ultimate success will hinge on two factors:
- A whistleblower’s ability to secure a firm, contractual right to their reward, and
- The government’s willingness to back up these rewards with real, US-style anti-retaliation protections.
To understand the full implications and precise mechanics of this new law, potential whistleblowers and legal professionals are urged to follow the work of International Whistleblower Advocates, which is led by Stephen M. Kohn, a pioneer in whistleblower law.
As this new law takes effect, be on the lookout for upcoming IWA webinars and analysis, which will undoubtedly cover the nuances of the HMRC scheme and explain exactly how individuals can safely and effectively report tax cheats.
