HMRC's Strengthened Reward Scheme: A New Compliance Risk Businesses Cannot Afford to Ignore
For many years, HMRC has operated an informant scheme allowing individuals to report suspected tax fraud in exchange for a discretionary payment. Until recently, that scheme was modest in scope but recent changes have materially altered things.
The Strengthened Reward Scheme, introduced at Autumn Budget 2025, represents a major shift in HMRC's approach to intelligence-led investigation. Individuals who provide information leading to a successful tax recovery of at least £1.5 million can now receive a financial reward of between 15% and 30% of the tax collected, excluding interest and penalties. This is no longer a token gesture: on a £5 million recovery, a whistleblower could receive up to £1.5 million.
Who Might Be Reporting?
The scheme is open to anyone. In practice, the most likely sources of intelligence are current or former employees, business partners, contractors, ex-spouses or civil partners, and professional advisers who have become aware of irregularities. Disgruntled colleagues and former directors should not be underestimated as a risk category. The financial incentive now provides a concrete reason, rather than simply a moral one, to pick up the phone to HMRC.
How HMRC Uses the Information
A report under the scheme does not automatically trigger a full investigation. HMRC will assess the intelligence and determine whether it has sufficient substance to act upon. However, if HMRC considers the information credible, it may open a compliance check, a COP9 investigation under the Contractual Disclosure Facility, or in serious cases, refer the matter to its Fraud Investigation Service for a criminal inquiry.
Importantly, the business or individual under investigation will not necessarily be told that a whistleblower referral prompted the enquiry. HMRC routinely uses information powers and discovery provisions to progress cases without disclosing the precise origin of its intelligence.
What This Means in Practice
The practical implications are significant. Businesses operating in areas of genuine tax complexity are not only exposed to routine HMRC compliance activity. They are now also exposed to the risk of internal disclosure by individuals who may have an incomplete or simply hostile view of the arrangements in place.
The threshold of £1.5 million in recovered tax is meaningful. It targets larger, more complex cases and not the straightforward undeclared income enquiry. That means the scheme is primarily aimed at medium and large businesses, high-net-worth individuals, and those with sophisticated tax structures, whether legitimate or otherwise.
A Note on Confidentiality
HMRC does not routinely disclose the identity of informants, and the scheme is structured to protect those who report. As a result, a business under investigation may have no indication that the enquiry was triggered by internal disclosure rather than HMRC's own data-matching activity.
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