HM Revenue & Customs (HMRC) has almost doubled the amount paid to people who provide warnings about suspected tax avoidance, handing out almost £1 million (£978,256) in the 2023/24 financial year compared to £508,500 last year.
The increase comes amid growing pressure to reduce the UK’s £39.8 billion tax gap—the difference between 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 tips to its fraud hotline in 2023/24, slightly below the 157,270 reports in 2022/23 but still second in seven years.
Andrew Park, Tax Investigations Partner at Price Bailey, described the payments as “tiny” compared to the billions lost to tax fraud every year. He suggested that the increase in prizes would encourage more people to come up with quality information. “A transparent system where the prize is equal to the amount of tax received would go a long way in encouraging big ticket bookings,” said Park.
Price Bailey highlighted the contrast with the United States, where the Internal Revenue Service (IRS) offers much larger rewards. In the most recent fiscal year, the IRS paid $89 million to 121 whistleblowers, resulting in $338 million in tax refunds—an average of $735,537 per person.
Park noted that the UK system is not transparent and that the rewards are selective and not linked to the amount of tax received. This lack of a significant financial incentive, coupled with the potential risk of hiring whistleblowers—many of whom are employees of the reporting companies—may prevent people from reporting serious tax fraud.
He also pointed out that the long process of resolving tax disputes acts as another disincentive. “Anything HMRC can do to make its reporting system more accessible and transparent will be welcomed,” added Park.
