UPDATE: HM Revenue & Customs (HMRC) is on the verge of unveiling a groundbreaking whistleblower reward scheme that could transform informants into millionaires overnight. This innovative program, expected to be announced at the Budget on November 26, 2023, will allow whistleblowers to receive up to 30% of any taxes recovered through their tip-offs, marking a significant shift in the UK’s approach to tackling tax fraud.
The urgency of this initiative stems from the staggering £5.5 billion lost to tax evasion in the UK during the fiscal year 2022-23. Experts believe the actual figure is likely much higher, prompting HMRC to implement a strategy that mirrors successful programs seen in the United States. This scheme is part of Chancellor Rachel Reeves’ broader plan to address an estimated fiscal shortfall of £20 billion–£30 billion.
By incentivizing whistleblowers, HMRC aims to reclaim a portion of the £47 billion in unpaid taxes that the UK loses annually. According to legal experts, this approach could significantly enhance HMRC’s enforcement capabilities. “By providing a financial safety net for whistleblowers in the form of monetary rewards, HMRC is poised to supercharge its enforcement capabilities,” said Mary Inman, a US lawyer at Whistleblower Partners.
Currently, HMRC’s existing whistleblower payments are minimal, totaling less than £1 million for the fiscal year 2023-24. In stark contrast, the US Securities and Exchange Commission awarded a single payment of $279 million during the same period. The proposed UK scheme will focus on high-value fraud cases while continuing to support smaller initiatives.
Officials emphasize that this rewards program is vital in combating large-scale tax evasion, having engaged in discussions with US agencies, including the Internal Revenue Service (IRS), over the summer. The IRS has distributed $1.3 billion to whistleblowers since 2007, rewarding them 15-30% of taxes reclaimed in cases with recoveries of at least $2 million.
Historically, the UK has resisted financial incentives for whistleblowers, advocating that individuals should act out of moral obligation. However, leading legal professionals, including the director of the Serious Fraud Office, have consistently pushed for such programs to reinforce prosecutions for economic crime.
As the Budget date approaches, anticipation builds around how this revolutionary scheme will reshape the landscape of tax compliance in the UK. The potential for millions in rewards is expected to attract not only domestic whistleblowers but also individuals from abroad, particularly as US agencies face staffing challenges under previous administrations.
With the clock ticking down to the November 26 announcement, all eyes are on HMRC and Chancellor Rachel Reeves as they prepare to roll out a program that could redefine the battle against tax fraud in the UK. Stay tuned for updates as this story develops.
