UK Treasury Launches Whistleblower Reward Program to Combat Tax Evasion

In a significant move to enhance tax compliance and revenue collection, the UK Treasury has announced a new whistleblower reward program aimed at incentivizing individuals to report tax avoidance and fraud. This initiative draws inspiration from successful models in countries like the United States and Canada, where such programs have proven effective in uncovering financial misconduct.​

Key Features of the Program

• Substantial Rewards: Informants could receive up to 25% of the additional tax revenue recovered due to their disclosures. This approach aims to encourage insiders with knowledge of illicit activities to come forward. ​

• Enhanced Enforcement: The government plans to invest an additional £1.4 billion in HM Revenue & Customs (HMRC) over the next five years to bolster tax collection efforts and address the estimated £6.5 billion annual tax gap. 

  
  

Rationale Behind the Initiative

The decision to implement this reward program stems from the recognition that insiders possess critical information necessary to detect and combat tax evasion effectively. By offering substantial financial incentives, the Treasury aims to motivate these individuals to report wrongdoing, thereby enhancing HMRC's ability to recover unpaid taxes.​

Comparative Insights

In the United States, the Internal Revenue Service (IRS) has a longstanding whistleblower program that has yielded significant results. In the 2022-23 fiscal year, the IRS paid out $89 million to 121 whistleblowers, leading to the recovery of an additional $338 million in taxes. This demonstrates the potential effectiveness of such reward schemes in uncovering substantial tax liabilities. ​

Expected Outcomes

The UK government anticipates that the introduction of this whistleblower reward program will lead to:​

• Increased Reporting: A higher number of individuals coming forward with information on tax evasion and fraud.​

• Improved Compliance: Deterrence of potential tax evaders due to the increased risk of exposure.​

• Enhanced Revenue: Recovery of substantial amounts in unpaid taxes, contributing to public finances and supporting economic growth.​

  
  

Conclusion

The UK Treasury's implementation of a whistleblower reward program marks a proactive step toward strengthening tax enforcement and promoting fairness within the tax system. By aligning with successful international models, this initiative aims to create a more robust mechanism for detecting and addressing tax evasion, ultimately benefiting the broader economy.​