UK Government Introduces Financial Incentives for Tax Avoidance Whistleblowers
Chancellor Rachel Reeves announces measures to close the tax gap, setting a target to raise an additional £7.5 billion annually through enhanced compliance and whistleblower compensation.
The UK government, under Chancellor Rachel Reeves, has confirmed that whistleblowers who report tax avoidance will receive a share of the proceeds collected by HM Revenue and Customs (HMRC).
This initiative is part of a broader strategy aimed at closing the UK's tax gap, with a new target to raise £7.5 billion annually.
Reeves discussed these plans during her spring statement, marking an increase from an earlier goal of £6.5 billion stated in her first budget in October.
Key components of the strategy include an allocation of £100 million for hiring 500 additional HMRC compliance staff and £87 million dedicated to improving HMRC’s debt collection capabilities.
The government aims to increase prosecutions of tax fraudsters by approximately 20% over the next five years, focusing on the most severe cases.
The proposed incentive scheme for whistleblowers will compensate informants based on a percentage of the tax collected as a direct result of their disclosures.
This initiative draws inspiration from similar practices in the United States, where whistleblowers are commonly rewarded for providing valuable information.
New consultations will be launched to examine further improvements in tax collection, including a specific focus on promoters of tax avoidance schemes.
According to Treasury estimates, these combined measures are expected to yield an additional £1.055 billion by the fiscal year 2029-30, a figure that has been validated by the Office for Budget Responsibility (OBR).
The bulk of the anticipated revenue, approximately £715 million, is projected to be generated from enhanced collection of overdue debts, facilitated by the hiring of 600 new compliance officers.
Other revenue sources include £125 million from increased penalties for late payments, £95 million from the addition of 500 staff members tasked with debt collection, and another £125 million from the extension of digitization efforts in income tax collection for individuals earning over £20,000, set to begin in 2028.
To combat tax evasion tactics such as 'phoenixisation,' where businesses exploit insolvencies to avoid tax liabilities, HMRC, Companies House, and the Insolvency Service are ramping up their anti-fraud efforts.
The government is committed to increasing the number of tax fraud prosecutions from 500 to 600 annually, in line with its strategy to enhance overall compliance and transparency within the tax system.
This initiative is part of a broader strategy aimed at closing the UK's tax gap, with a new target to raise £7.5 billion annually.
Reeves discussed these plans during her spring statement, marking an increase from an earlier goal of £6.5 billion stated in her first budget in October.
Key components of the strategy include an allocation of £100 million for hiring 500 additional HMRC compliance staff and £87 million dedicated to improving HMRC’s debt collection capabilities.
The government aims to increase prosecutions of tax fraudsters by approximately 20% over the next five years, focusing on the most severe cases.
The proposed incentive scheme for whistleblowers will compensate informants based on a percentage of the tax collected as a direct result of their disclosures.
This initiative draws inspiration from similar practices in the United States, where whistleblowers are commonly rewarded for providing valuable information.
New consultations will be launched to examine further improvements in tax collection, including a specific focus on promoters of tax avoidance schemes.
According to Treasury estimates, these combined measures are expected to yield an additional £1.055 billion by the fiscal year 2029-30, a figure that has been validated by the Office for Budget Responsibility (OBR).
The bulk of the anticipated revenue, approximately £715 million, is projected to be generated from enhanced collection of overdue debts, facilitated by the hiring of 600 new compliance officers.
Other revenue sources include £125 million from increased penalties for late payments, £95 million from the addition of 500 staff members tasked with debt collection, and another £125 million from the extension of digitization efforts in income tax collection for individuals earning over £20,000, set to begin in 2028.
To combat tax evasion tactics such as 'phoenixisation,' where businesses exploit insolvencies to avoid tax liabilities, HMRC, Companies House, and the Insolvency Service are ramping up their anti-fraud efforts.
The government is committed to increasing the number of tax fraud prosecutions from 500 to 600 annually, in line with its strategy to enhance overall compliance and transparency within the tax system.
