This blog was originally published by FTAdviser on 2 December 2025.
One aspect of last week's Budget that garnered little attention was the announcement of a new reward scheme for whistleblowers who provide valuable information that allows HMRC to tackle serious tax avoidance and evasion.
The scheme, modelled on that operated by the US Internal Revenue Service, will offer whistleblowers up to 30 per cent of any tax amounts collected over £1.Smn on the back of the information provided.
If used effectively by HMRC, this could be a hugely positive and potentially transformative development for the detection and deterrence of high-value tax evasion and, eventually, other high-value financial crimes in the UK.
HMRC has long held the power to pay rewards to whistleblowers, as has the Competition and Markets Authority in a cartel context, but HMRC's previous scheme was not widely publicised and payouts were modest.
HMRC paid out just £852,000 to parties providing actionable information in the 2024 tax year. The IRS, meanwhile, paid out $124.Smn from October 2023 to September 2024 for information that helped recover $474.7mn.
In a different US context, the Securities and Exchange Commission paid $279mn to a single whistleblower whose information and assistance led to the successful enforcement of SEC and related actions in 2023.
There is a historic cultural and institutional reluctance in the UK to embrace the US style and scale whistleblower payouts.
Such reluctance is often framed in terms of concerns that large payouts will result in an unmanageable flood of bad faith, low-quality tip-offs; that government payouts undermine internal whistleblower programmes; that those blowing the whistle should do so as a result of their moral conscience and rather than a financial incentive; that paying whistleblowers who subsequently give evidence renders them fatally vulnerable to attack lines by defence lawyers; and that UK whistleblower protections (from professional retaliation and ostracism) first need to be strengthened for incentive schemes to stand a chance of working.
While some of these arguments may have merit, individually and collectively they are overstated and do not present a compelling basis for resisting the introduction of US-style whistleblower incentive schemes, which have been shown to increase the detection and deterrence of wrongdoing.
The experience of US regulators with years spent overseeing equivalent schemes is overwhelmingly positive. Officials speak of not only receiving high-quality information but on occasion blueprints laying out an entire criminal enterprise.
That the UK's current whistleblower protection framework is flawed and offers only limited conditional protection is a compelling argument for introducing meaningful financial rewards.
Indeed, the UK baseline of no rewards and limited protection represents the worst of all worlds, crystallising the risk that whistleblowers do not come forward at all.
Whistleblowers often face significant consequences, so they should receive compensation that reflects the impact on their wellbeing, reputation, and career. To do otherwise undermines the utility of the scheme as an effective deterrence.
It is also worth remembering why the director of the Serious Fraud Office, among others, has been calling for the introduction of a high-value whistleblower reward scheme.
It is for intelligence not evidence. Although some whistleblowers may go on to become co-operating witnesses and give evidence, many will not. Their primary value is their inside track information, which can materially improve the speed and effectiveness of a criminal investigation. With an insider's knowledge, investigators know what to look for and where to look for it, who to speak to, and what to ask.
The design of HMRC's scheme is by no means perfect - payments are not guaranteed and are at HMRC's discretion (whistleblowers may not want to risk their livelihood on the mood of a tax official), and anonymous whistleblowers are excluded from receiving a reward - but its design can of course be recalibrated in due course.
Above all, the scheme's significance lies in the direction of travel. It reflects a shift in the legal Overton window, finally bringing the previously unthinkable US concept of large-scale whistleblower payouts within the range of acceptable UK criminal investigation and enforcement policy ideas.
This should make the job of lobbying for change to the whistleblower incentive frameworks of other UK enforcement agencies, such as the SFO, that much easier.
