HMRC’s strengthened reward scheme for whistleblowers of tax avoidance and evasion

The new scheme
 

The Chancellor has announced the terms of the financial incentive for those who report serious tax avoidance or evasion, the Strengthened Reward Scheme. Between 2023 and 2024, there is estimated to be a tax gap of £46.8 billion between the amount of tax recovered by HMRC and the amount of tax due to HMRC. With a minimum threshold of £1.5 million in unpaid tax, the scheme aims to address the tax gap by specifically targeting large-scale tax evasion by companies, wealthy individuals, and offshore or avoidance schemes.

Under the Strengthened Reward Scheme, if an individual provides information to HMRC which results in the collection of a minimum of £1.5 million in tax, the individual could be rewarded between 15% and 30% of the tax subsequently collected by HMRC. This figure excludes any penalties or interest due on the unpaid tax.

How to report

Individuals can confidentially report their suspicions of tax evasion via HMRC’s online portal. Within this report, HMRC request information relating to the type of activity being reported; how the reporter knew about it; their relationship to the suspected business or individual; the total value of the activity and a description of any supporting information.

The strengthened reward scheme

The so-called Strengthened Reward Scheme is modelled on similar programmes successfully adopted in the US and Canada where whistleblowers are paid a proportion of the proceeds collected as a result of the information they have provided to their respective tax authorities. In the 2024 financial year, the IRS Whistleblower Office paid whistleblower awards totalling $123.5 million out of the proceeds of recovered unpaid tax totalling $474.7 million. If HMRC’s new scheme can boast similar successes, it could play a significant role in both addressing the UK’s tax gap and bolstering the protections afforded to tax whistleblowers.

Alongside HMRC, the Serious Fraud Office (“SFO”) have similarly stated in their 2025-2026 Business Plan their intentions to “progress whistleblower incentivisation reform”. The SFO handles cases of serious fraud, bribery and corruption and such offences can often go hand in hand with tax evasion. Whistleblowers provide vital sources of information in the context of economic crime and, according to the SFO’s Annual Report on Whistleblowing Disclosures 2024-25, the SFO took subsequent action in over 92% of the whistleblowing disclosures received through their online portal. The Strengthened Reward Scheme could therefore form part of a wider suite of government agency measures aimed at addressing economic crimes by developing the range of incentives offered to whistleblowers.

Opening the floodgates to reporting

However, the enticing financial incentives offered by the scheme could lead to a significant number of vexatious claims or otherwise unfounded reports through the portal. The threshold of £1.5 million in recovered funds will also mean that, whilst many reports may be genuine and lead to the recovery of significant unpaid tax, only few will qualify for a reward.

Substantial resources will be required to sift through reports to find any valuable information leading to the actual recovery of funds. HMRC have announced in the Autumn 2025 budget that they will be deploying 350 newly recruited investigators in their Fraud Investigation Service, as part of their wider promise to recruit an additional 5,000 compliance staff to address the tax gap during this government’s term. It remains to be seen whether HMRC’s hiring surge will be sufficient to enable them to effectively and efficiently review the additional reports made following the announcement of the Strengthened Reward Scheme.

Delayed and discretionary rewards

Once whistleblowers with authentic claims have been filtered through the reporting system, the information they have provided may commence a formal investigation by HMRC. HMRC have themselves emphasised that “there could be years between [an individual] sending the report and receiving and reward payment.”

After waiting for the completion of an investigation for potentially years, any figure rewarded to whistleblowers is entirely subject to HMRC’s discretion.  A financial reward is not guaranteed under the scheme and so the strengthened protection offered to whistleblowers remains optional. Whistleblowing charities have therefore called for transparency regarding the operation of the scheme, the success rate of claims, the calculation of the rewards and how HMRC plan to protect individuals who do not receive an award through the scheme.  

Protection for whistleblowers?

Whistleblowers regularly face reputational, regulatory and legal challenges as a result of their decision to speak out. Under the current guidance it is not yet clear how those who report through the portal will be protected and supported by HMRC, beyond the possibility of receiving a financial reward. Financial compensation alone will not resolve the wider consequences whistleblowers may face for partaking in the scheme. Financial incentives must be accompanied by a wider range of measures to actively protect those who decide to come forward and report. Such protections should be clearly outlined in the HMRC guidance to allow whistleblowers to make an informed decision on whether they decide to report.

Notably, individuals who choose to provide information anonymously through the portal will not be eligible for any financial reward under the scheme. The main protection afforded to whistleblowers, namely their guaranteed anonymity, is therefore ousted from the rewards scheme at the outset. HMRC have emphasised that any information provided through the portal will be “private and confidential”, however, it remains unclear the extent to which whistleblowers may be expected to engage in any resulting investigations. For example, whistleblowers may be asked to serve as a witness to later proceedings and therefore lose their right to confidentiality. HMRC should therefore publish further guidance as to the level of co-operation required of whistleblowers, in any subsequent tax investigations, to merit a reward under the scheme.

Opportunity to review existing procedures

Given the focus of HMRC in this area, it would be a prudent move for companies, trusts, and family offices (at least) to consider proactively reviewing their current whistleblowing policies.  In an ideal situation, if there is something which may give rise to an HMRC investigation, then an organisation’s internal reporting procedures should have picked this up allowing advice to be sought at an early stage.

As with dealing with other types of disclosures, it should be clear to those stakeholders what the next steps would be upon receipt of confirmation that someone has made a whistleblowing report to HMRC.  This may be one of a growing list of areas which require interaction between the legal office, the tax team, the finance team, and human resources (as relevant).

Equally, in extreme examples where HMRC may consider dawn raids, either a policy should be put in place (or refreshed) given this latest development.

Regardless of the way the scheme proceeds in reality, it is clearly an area that needs to be considered as part of situations where someone might be leaving an organisation (voluntarily or otherwise) and what provisions can be put in place in order to protect the organisation insofar as is possible.

If you or your business are reported via the scheme

Whilst the parameters of the scheme are new, the impact that it may have on taxpayers being reported can be significant. If HMRC have enough evidence to issue an enquiry or investigation, taxpayers should seek professional advice as soon as possible to manage the process. 

If there are any potential discrepancies that have been identified by an individual or corporate taxpayer, it is often best to approach HMRC first so that the taxpayer is in control of the process and any penalties can be mitigated.  

Depending on the evidence available to HMRC, the investigation can be civil or criminal and it is imperative that professional advice is taken without delay.

Summary
 

HMRC’s Strengthened Reward Scheme has the potential to tackle the UK’s tax gap by specifically addressing large-scale tax evasion by corporations, offshore schemes and high-net worth individuals. However the success of the scheme will require significant HMRC resources to assess the merits of reports and handle the subsequent investigations with efficiency and transparency to ensure that whistleblowers who provide valuable information are identified and fairly rewarded.  

About the authors

David Sleight is a highly sought-after criminal litigator specialising in complex, sensitive and high-profile cases. He is recognised for his strategic approach and ability to get results.

Waqar is a Partner in the Dispute Resolution department, focusing on the resolution of complex tax matters. He acts for high net worth individuals and corporate clients across all sectors in respect of HMRC disputes and investigations across the full range of taxes. This typically includes VAT disputes, employment tax matters (including 'IR35'/off-payroll working), customs/excise duty issues, tax fraud investigations, and more recently, National Minimum Wage enquiries.

Krishna is a Senior Associate in the Dispute Resolution Team, who specialises in litigation and resolution of complex tax matters.