UPDATE: HM Revenue & Customs (HMRC) is set to unveil a groundbreaking whistleblower reward scheme at the upcoming Budget on November 26, with potential payouts reaching millions for informants who expose tax fraud. This US-style initiative could allow whistleblowers to claim up to 30% of recovered taxes, potentially transforming them into some of the UK’s wealthiest citizens overnight.
This urgent development addresses the staggering £5.5 billion lost to tax evasion in the 2022-23 fiscal year, a figure that experts believe is vastly underestimated. Chancellor Rachel Reeves aims to tackle a projected fiscal shortfall of £20 billion–£30 billion with this new program, which is expected to reclaim funds that currently contribute to the UK’s annual £47 billion tax gap.
Legal experts are optimistic about the scheme’s impact. Mary Inman, a US lawyer at Whistleblower Partners, stated,
“By providing a financial safety net for whistleblowers in the form of monetary rewards, HMRC is poised to supercharge its enforcement capabilities.”
She emphasized that financially motivated whistleblowers can significantly enhance the UK’s efforts to combat tax fraud.
The proposed scheme draws inspiration from the US Internal Revenue Service (IRS), which has successfully distributed $1.3 billion to whistleblowers since 2007, from $7.4 billion in recovered funds. Under the IRS model, whistleblowers receive between 15-30% of taxes reclaimed in cases involving at least $2 million. In stark contrast, HMRC’s current whistleblower payments are minimal, totaling under £1 million for the 2023-24 period.
Historically, the UK has resisted substantial monetary rewards for whistleblowers, insisting that the ethical imperative should suffice. However, this new initiative reflects a shift in policy, driven by calls from legal professionals and economic crime prosecutors, including the head of the Serious Fraud Office, for enhanced financial incentives to strengthen tax fraud prosecutions.
The launch of this scheme could also attract international whistleblowers, especially as US agencies face staffing shortages. A Treasury spokesperson declined to comment on speculation surrounding the Budget but has acknowledged the need for effective measures against tax evasion.
As the November 26 date approaches, all eyes will be on HMRC’s announcement, which could revolutionize how tax fraud is reported and prosecuted in the UK. Stay tuned for more updates on this developing story.
