Budget 2025 confirms that HMRC will adopt a US-style reward scheme for people who report serious tax fraud and evasion. Media coverage highlights large potential payouts and a tough stance on “fraudulent businesses”. In reality, the scheme will sit alongside existing HMRC investigation tools such as COP9, and it raises real questions about risk, confidentiality and civil versus criminal exposure for both whistleblowers and those who are reported.
At a glance
- Budget 2025 introduces a formal whistleblower reward scheme that will pay informants a share of tax recovered in large fraud and evasion cases, inspired by the US and Canadian models.
- The scheme will focus on higher value cases where HMRC believes there has been serious non-compliance, and will sit alongside COP8 and COP9 civil investigation processes.
- HMRC will still decide whether to treat a case as civil or criminal, and will continue to rely heavily on its Contractual Disclosure Facility in COP9 where deliberate behaviour is suspected.
- Anyone who fears they may be the subject of an informant report, or who is thinking about providing information themselves, should understand the legal framework before acting.
What exactly has the Treasury announced about the new US-style HMRC whistleblower scheme?
The Treasury has confirmed that HMRC will run a formal whistleblower reward scheme as part of a wider push to close the tax gap and raise an extra 2 to 3 billion pounds a year by the end of the Parliament.The model draws on US practice, where the Internal Revenue Service pays a percentage of tax recovered to individuals who provide information that leads to successful enforcement action.
According to early reports, the UK scheme will:
- target serious tax avoidance and evasion, particularly involving larger companies and high net worth individuals
- pay a percentage of tax recovered where the information is new, specific and significant
- focus on cases above a financial threshold, with awards likely to be considered only where recoveries meet a minimum value
- remain discretionary, with HMRC retaining control over whether a reward is made at all
The Treasury has presented this as a fairness measure aimed at “fraudulent businesses” that do not pay the tax that is due. For HMRC it is one strand in a much bigger compliance package that also includes more investigators, stronger CIS enforcement, additional debt collection staff and tougher penalties.
FWJ Takeaway: The new scheme is real, but it is not a general tip-off bonus for every complaint. It will be used mainly in serious and higher value cases where HMRC thinks a whistleblower can unlock significant extra tax.
How does the new HMRC whistleblower reward scheme compare to the US model in practice?
Media coverage often suggests that the UK is about to copy the US system wholesale. In practice there are likely to be important differences.
In the US, the IRS can pay between 15 and 30 per cent of tax collected in cases where the total exceeds a statutory threshold, and there is a formal right of appeal if the whistleblower disagrees with the outcome. In the UK, early indications are that:
- HMRC will retain wide discretion over whether to pay a reward at all
- there may be no automatic right to challenge or appeal the amount paid
- HMRC will exclude individuals who were themselves involved in the most serious wrongdoing
- anonymous or vague reports are unlikely to qualify
Campaign groups have welcomed the idea in principle but have already called for clear guidance on how awards will be calculated and how whistleblowers will be protected.
From the perspective of a business or individual who might be reported, this means that HMRC will treat informant information as one piece of evidence within a broader investigation, not as a guaranteed route to criminal proceedings or automatic penalties. The civil investigation framework, particularly COP9, will remain central where HMRC suspects deliberate behaviour.
FWJ Takeaway: The UK scheme borrows ideas from the US but will still be controlled tightly by HMRC. It is an additional source of information, not a replacement for existing civil investigation processes.
How will an informant report actually feed into an HMRC investigation?
HMRC has relied on informants for many years, even without a formal reward scheme. In practice, an informant report will usually feed into one of three routes:
- a risk-based review of existing tax returns and records
- a decision to open a civil enquiry under COP8 or COP9
- in the most serious cases, a criminal investigation
A detailed report, backed by documents or data, is more likely to trigger a focused COP9 investigation where HMRC believes there has been deliberate misstatement or concealment. COP9 allows HMRC to invite the taxpayer to use the Contractual Disclosure Facility and make a complete civil disclosure in return for immunity from criminal prosecution, provided the disclosure is full and honest.
Less serious or more technical allegations may result in a COP8 enquiry, where HMRC reviews transactions it considers to be avoidance or high risk. Basic or unsubstantiated allegations may be used as background risk information rather than leading to immediate formal action.
Crucially, the taxpayer is not told who has made the report or exactly what has been said. The initial HMRC letter will usually be framed in general terms, but the questions asked may be highly specific if they are based on insider information.
FWJ Takeaway: Informant information is often the trigger for HMRC contact, but you will not be told who has spoken. The real issue is how you respond to the first letter or meeting request.
What are the risks and protections for whistleblowers under the new scheme?
From the whistleblower’s perspective, the scheme raises its own set of risks. On one hand there is the possibility of a reward, and the chance to expose serious wrongdoing. On the other, there are questions about confidentiality, employment rights and personal legal risk.
Under UK law, individuals may have protection under the Public Interest Disclosure Act 1998 if they make a qualifying disclosure about wrongdoing at work and follow the statutory framework. In tax cases, that can include reporting criminal offences or breaches of legal obligations. However, not all reports will qualify, and protection will depend on the channel used and the nature of the allegation.
Budget 2025 does not create a separate set of employment protections for tax whistleblowers. It adds a financial incentive, not a new legal shield. Potential whistleblowers still need to consider:
- whether their own conduct might be questioned if they were involved in the arrangements
- whether they are breaching confidentiality or data protection duties
- whether they are using the scheme responsibly and in good faith
Independent advice is usually sensible before making any formal report, particularly if the individual is closely involved in the business, is a senior employee or is a professional adviser.
FWJ Takeaway: The reward scheme may make it more attractive to come forward, but it does not magically remove all personal or professional risk for whistleblowers.
What should you do if you fear someone has reported you to HMRC?
For many directors and individuals, the real concern is not whether they could claim a reward but whether a former employee, business partner or adviser might report them. Budget 2025 is likely to increase that anxiety, especially in sectors where cash, complex structures or aggressive planning are common.
If you suspect that someone has made, or may soon make, a report about you, the safest steps usually include:
- reviewing your tax position with an independent specialist
- identifying any obvious irregularities or risks around past returns
- considering whether a voluntary disclosure to HMRC would put you in a stronger position
- avoiding any attempt to destroy or alter records
- taking legal advice before contacting HMRC or making any statements
If HMRC has already written to you, the wording of any reply is critical. It should not be drafted in a way that is incomplete or misleading, but it should also not volunteer unnecessary information without a clear strategy. In a potential COP9 context, decisions about whether to accept the Contractual Disclosure Facility and how to frame a disclosure need careful handling.
FWJ’s tax dispute team regularly advises individuals and companies who suspect that informant information has played a part in HMRC’s decision to investigate. Our focus is on keeping matters within the civil process wherever possible and protecting clients from unnecessary criminal exposure.
FWJ Takeaway: If you think you may have been reported, do not panic and do not rush into direct contact with HMRC. A calm, planned response with specialist advice is far safer.
How does the whistleblower scheme fit with COP9, civil disclosure and criminal risk?
The new reward scheme does not replace HMRC’s existing powers. Instead it sits on top of them and may increase the number of cases where HMRC has insider information that points towards deliberate behaviour.
Where HMRC has a credible informant, it will still make a choice:
- civil route through COP9, with an invitation to full disclosure and potential immunity from prosecution
- technical or avoidance route through COP8
- criminal investigation in the most serious or aggravated cases
For taxpayers, the key point is that the existence of a whistleblower does not automatically turn a case into a criminal prosecution. A well managed COP9 disclosure can still resolve matters civilly, even if HMRC originally had strong suspicions.
However, the presence of informant information may make HMRC more sceptical of incomplete explanations and more ready to escalate if it believes it is not getting the full picture. That is why strategic advice at an early stage is so important.
FWJ Takeaway: The whistleblower scheme makes it more likely that HMRC will have inside information, but it does not remove the possibility of a civil resolution. How you handle the process will be decisive.
Read more of our key points form the 2025 Budget
Speak to Francis Wilks & Jones today about tax disclosure
If you are worried that someone may have reported you to HMRC, or you are considering making a report yourself and want to understand the legal risks, our specialist tax dispute team at Francis Wilks & Jones can help. We focus on civil solutions, clear advice and practical outcomes.
