People who report major tax cheats could soon be in for a big payday.
HMRC is said to be planning a new reward scheme that could pay up to 30% of the tax recovered from large-scale fraud cases. For some people, that could mean millions.
The plan, expected to be confirmed in the Budget on 26 November, takes inspiration from the United States, where whistleblowers have been earning huge sums for years.
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Claim sign-up bonusWhy HMRC is doing it
The government loses around £47 billion a year in unpaid taxes, and roughly £5.5 billion of that is thought to be tax evasion. Experts believe the true figure is probably much higher.
With a gap of £20 to £30 billion in the public finances, Chancellor Rachel Reeves is looking for ways to bring some of that money back in.
Encouraging people to report serious fraud is one way to make sure everyone pays what they owe.
How it would work
If the plans go ahead, whistleblowers who report big cases of tax fraud could get a share of whatever HMRC recovers, with payments capped around 30%.
Smaller reward schemes already exist, but payouts are tiny, adding up to less than £1 million in total last year.
In the US, their tax authority, the IRS, has paid out more than $1.3 billion to whistleblowers since 2007, helping recover over $7 billion in unpaid taxes.
Successful informants there can receive between 15% and 30% of the money collected, but only for large cases worth over $2 million.
Why this matters
The UK has always argued that people should report wrongdoing because it is the right thing to do, not for a reward. But that approach has not stopped widespread tax fraud.
Lawyers and fraud investigators have been calling for years for a proper financial incentive to get more people to come forward.
Skint Dad says:
Some people might question whether or not to risk their job or safety to do the right thing, but if there is life-changing money on the table, that changes things.
If it works, the scheme could make it harder for big companies or wealthy individuals to dodge their taxes. It could also help honest taxpayers by putting more money back into public services.
Could you report someone
It is not yet clear how the process will work, but it will likely involve a secure and confidential way to report tax fraud, similar to how the American system operates.
For most people, this is not about telling on your neighbour for a small cash job. It is aimed at large-scale fraud involving companies, offshore accounts, or organised crime.
What happens next
HMRC has not confirmed the details yet, but all signs point to an announcement in the Budget later this month.
If it follows the American model, it could be one of the biggest changes to tax enforcement in decades.
Whether you agree with paying people to report fraud or not, it is hard to ignore how much money the government could recover, and how much a few brave whistleblowers might earn in return.
