More than 164,000 alleged tax fraud cases were reported to HMRC last year, yet whistleblower rewards declined by 13%. Experts say the current reward system lacks transparency and may be limiting its effectiveness.
HM Revenue & Customs (HMRC) has paid £850,000 in rewards to individuals who reported suspected tax fraud in the 2024/25 tax year. The figure comes despite a record number of 164,670 tip-offs, marking a 9% rise from the previous year, according to a Freedom of Information (FoI) request by Price Bailey.
The sharp rise in public reporting has renewed debate over HMRC’s approach to compensating informants. While the volume of reports is at an all-time high, total payouts fell from £978,256 the year before—a drop of 13%. Analysts suggest the system may be failing to properly incentivise valuable whistleblowing.
Record Tip-Offs Reflect Growing Public Engagement With Tax Enforcement
The number of fraud reports sent to HMRC has increased steadily, reaching 164,670 in 2024/25, up from 151,763 the previous year. The surge is being interpreted as a sign that individuals are more willing to report suspected tax violations under the current Labour Party government.
Informants can be rewarded when their information leads to successful investigations or recovery of unpaid tax. However, HMRC has no fixed rate or published guidelines governing how payments are calculated. This has led to criticism from tax experts, who argue that the lack of transparency is discouraging higher-quality disclosures.
According to Andrew Park, a tax investigations partner at Price Bailey, “the current reward system lacks both scale and clarity” at a time when HMRC is placing increasing reliance on intelligence from the public. Park says the department “makes payment for tip-offs on a case-by-case basis”, with no clear link between the quality of intelligence and the amount recovered.
Calls Grow for Reform as Experts Push for Percentage-Based System
Several industry figures are now calling on HMRC to reform its whistleblower reward structure. Park argues that adopting a transparent, percentage-based model, similar to that used by the US Internal Revenue Service (IRS), could encourage more impactful intelligence submissions.
“The experience of the IRS shows that substantial amounts of money can be recouped by paying informants tax geared sums.” said Kate Ison, partner at BCLP. She added that HMRC’s scheme has not historically provided the kind of financial incentives needed to attract major whistleblowers.
Park echoed this, warning that a poorly structured system risks attracting a high volume of low-value or unverifiable claims. “It must balance the right incentives with selectivity to avoid flooding the system with more noise,” he said.
