The UK government is set to launch a new whistleblower reward scheme later in 2025, offering individuals up to 25% of the additional tax revenue recovered from their disclosures.
This initiative aims to combat tax fraud and avoidance, particularly targeting large corporations, wealthy individuals, and offshore schemes. The move draws inspiration from successful models in the US and Canada, where substantial rewards have incentivised insiders to report significant tax evasion cases.
For instance, in the 2022-23 fiscal year, the US Internal Revenue Service paid $89 million to 121 whistleblowers, leading to an additional $338 million in tax collection.
Currently, the UK’s HMRC’s reward system is discretionary and has been criticised for its minimal payouts, with just under £1 million distributed in total last year.
The new scheme is part of a broader strategy to close the UK’s tax gap, estimated at £39.8 billion for the 2022/23 tax year. By offering significant financial incentives, the government hopes to encourage more individuals to come forward with information on tax non-compliance, thereby increasing tax revenues and promoting fairness in the tax system.
This development underlines the importance for businesses and financial professionals to ensure robust tax compliance practices, as the risk of internal disclosures leading to investigations and substantial penalties is set to increase.
I’m all for a fairer tax system, but wonder how many of those whistleblowers may fear they will be looking over their shoulders for the rest of their lives?
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