Whistleblowing and Tax Compliance: What businesses need to know about HMRC’s New Reward Scheme

In the Autumn Budget 2025, the Chancellor unveiled a significant development to its approach to tax avoidance and evasion: the Strengthened Reward Scheme for whistleblowers. This initiative forms part of the government’s broader strategy clamp down on those who seek to bend or break tax rules and close the tax gap which stood at £46.8 bn in 2023-2024.     

What is the New Reward Scheme?

The scheme builds on HMRC’s existing powers to compensate individuals who provide information leading to the recovery of unpaid tax. Historically, rewards were discretionary and the framework to calculate the value of rewards lacked transparency, offering little incentive for individuals to expose large-scale tax fraud.

The new framework introduces clearer parameters and aims to encourage whistleblowing in cases involving:

• Large corporates
• High-net-worth individuals
• Offshore structures and avoidance schemes

Key features of the scheme

The UK’s approach draws on successful models in the U.S. and Canada and has adopted similar features to the IRS whistleblower program. These features are designed to incentivise whistleblowing by providing a clearer calculation of any potential reward, such as:

• Defined Reward Range: Whistleblowers may receive 15%–30% of the tax recovered (excluding penalties and interest) where their information results in the collection of at least £1.5 million.
• No Cap on Rewards: Payments are uncapped and linked directly to the amount of tax recovered.

The government’s intention is that a clearer compensation framework will incentivise whistleblowers with knowledge of significant tax avoidance or evasion to come forward, offering that information in exchange for a more defined award. This model has proven successful in the U.S.; for example, the IRS whistleblower program has paid out $1.3 billion since 2007, recovering over $7 billion in unpaid taxes and penalties. However, a key point of difference is that HMRC has confirmed rewards will remain discretionary, in contrast to some of its North American counterparts.

What information qualifies under the scheme?

While detailed guidance is awaited, to qualify for a reward, we expect that information must be:

• Original, credible, and verifiable.
• Capable of leading to the recovery of unpaid tax.
• Not already known to HMRC or discoverable through routine processes.

Our view

The Strengthened Reward Scheme is just one element of the suite of measures announced in the Autumn Budget, aimed at collecting unpaid tax and modernising the tax system. The government has also announced its legislative intent to address promoters of marketed tax avoidance, introduce new powers and sanctions to tackle tax advisers who facilitate non-compliance, and strengthen HMRC’s resourcing—particularly through a new dedicated small business evasion and enforcement team—to improve enforcement of tax rules. The government is serious about its tax debt strategy and is investing in the machinery to deliver it.

While the introduction of the Strengthened Reward Scheme underscores the importance of proactive compliance, corporate entities do already face criminal liability for failing to prevent the facilitation of tax evasion. The changes, however, potentially increase likelihood of failure to prevent offences being spotted by the authorities.

Under the Criminal Finances Act 2017 (CFA), corporate entities can face an unlimited fine for failing to prevent tax evasion offences, either in the UK or overseas. This liability was expanded by the Economic Crime and Corporate Transparency Act 2023, which allows corporate entities to be held liable for economic crimes carried out by senior managers acting within the scope of their authority. HMRC has now flexed its powers under the “failure to prevent the facilitation of tax evasion” structure by charging Bennett Verby, an accountancy firm based in Stockport, under section 45 of the CFA for an alleged research and development repayment fraud. With a trial date set for 27 September 2027, Bennett Verby will likely be preparing a defence to show that it had reasonable prevention procedures in place at the time of the offence.

The prosecution of Bennett Verby highlights the importance of ensuring that robust compliance frameworks are in place and that the risk of tax evasion is proactively managed. Businesses will need to review their compliance frameworks, if they have not already done so, to ensure they have a defence in the event of whistleblowing under the new scheme.

It is important that you:

• Review compliance frameworks to ensure robust tax governance. The government has released guidance to assist corporate entities in developing these frameworks, including six guiding principles to follow.
• Assess whistleblowing policies internally to manage risks and encourage internal reporting.
• Prepare for increased scrutiny, particularly if operating complex structures or cross-border arrangements.