HMRC has almost doubled the amount paid to individuals providing information about suspected tax evasion, disbursing almost £1 million (£978,256) in the 2023/24 financial year compared to £508,500 the previous year.
The increase comes amid growing pressure to reduce the UK’s £39.8bn tax gap – the difference between the tax that should be collected and what is actually received.
According to data obtained under the Freedom of Information Act by accountancy firm Price Bailey, HMRC received 151,763 anonymous reports via its fraud hotline in 2023/24, slightly lower than the 157,270 reports in 2022/23 but still second The highest percentage in seven years.
Andrew Park, tax investigations partner at Price Bailey, described the payments as “trivial” when measured by the billions lost to tax fraud annually. He noted that significantly increasing rewards could motivate more individuals to come forward with high-quality information. “Having a transparent system in which the reward is proportional to the amount of tax refunded would go a long way in encouraging reporting of big tickets,” Park said.
Bryce Bailey highlighted the contrast with the US, where the Internal Revenue Service (IRS) offers much larger rewards. In the last fiscal year, the IRS paid $89 million to 121 whistleblowers, resulting in $338 million in tax refunds — an average of $735,537 per whistleblower.
Park noted that the UK system is less transparent and that compensation is discretionary and not linked to the amount of tax refunded. This lack of significant financial incentives, combined with the potential risks to hiring whistleblowers—many of whom are employees of the companies they report on—may prevent individuals from reporting major tax fraud.
He also noted that the lengthy process of resolving tax disputes is an additional barrier. “Anything HMRC can do to make its reporting system easier and more transparent would be welcome,” Park added.