HMRC gave tax informants £850,000 for reporting record fraud to the taxman last year

Approximately 164,670 cases of suspected fraud were reported to the tax collector last year; however, the total amount of rewards given to snoops decreased in the 2024–05 tax year

Informants reported people and companies they thought were abusing the system, and in the most recent tax year, HMRC received a record number of tip-offs on suspected fraud.

The 2024 - 2025 tax year saw 164,670 anonymous tip-offs of suspected tax offenses through the taxman's fraud hotline channels, a 9% increase over the 151,763 reports received in the 2023 - 2024 tax year.

Price Bailey's Freedom of Information (FoI) request revealed that a total of 852,438 was compensated to informants whose tip-offs yielded actionable intelligence on tax fraud, which is 13% less than what HMRC provided in the previous tax year (978,256).

The chartered accountancy stated that the growing number of tip-offs and the decreasing number of rewards paid indicate that HMRC is receiving even less valuable information that would justify discretionary payments, along with an increasing volume of low-value or unverifiable evidence.

Price Bailey adds that the taxman is experiencing an increase in speculative, inflated, or malicious claims as more people become aware that HMRC offers rewards for information about suspected tax fraud.

One way the government has attempted to reduce the 5.5 billion tax gapthe discrepancy between the amount of tax owed and the amount actually paidis by rewarding informants who provide the taxman with actionable information about suspected tax fraud.

In contrast to other systems around the world, such as the US, HMRC provides informants with discretionary, small payments rather than a portion of the tax collected.

As the tax collector depends more and more on taxpayer intelligence, Price Bailey's Andrew Park, a partner in tax investigations, stated that "the current reward system lacks both scale and clarity."

"HMRC needs to reconsider how it incentivizes risk and insight if it hopes to get informants to provide high-value intelligence. He continued by saying that there would be genuine incentives for revealing significant fraud under an open, percentage-based system similar to the IRS's.

Tax snoops will no longer be rewarded the same way by HMRC.

Although more than 164,000 tips have been received, indicating that the current reward system is somewhat effective, HMRC appears to be aware of the issues raised by Park.

As part of its efforts to combat tax fraud, HMRC announced a new whistleblower program in March.

Though specifics have not yet been disclosed, the new system, which is more obviously modeled after that of the US Internal Revenue Service (IRS), will compensate whistleblowers with a percentage of any tax that is recovered.

In order to prevent adding more noise to the system, Park at Price Bailey says the new system "may be a game-changer, but it must balance the right incentives with selectivity."

The IRS's experience demonstrates that significant sums of money can be recovered by paying informants tax-geared sums, which is in line with what Kate Ison, a partner at BCLP, says.

"HMRC's present program has never really provided the appropriate incentives to entice significant whistleblowers to come forward.

How to notify HMRC about tax fraud.

The government encourages you to report tax fraud if you are aware of or suspect that a company or individual is engaging in it.

If you believe that someone is defrauding HMRC in any of the following ways, you can report them here.

Tax evasion or avoidance Child Benefit or tax credit fraud Hiding or moving assets, cash, or cryptocurrency Illicit alcohol, tobacco, and road fuel Smuggling of precious metals Importing or exporting goods without a license Importing or exporting goods that are subject to sanctions By filing a report, you can use the form on the gov . uk website or call the HMRC fraud hotline at 0800 788 887.

Simply alerting HMRC to the suspected fraud does not guarantee a reward.

Only informants who offer useful information that the tax collector can use to recoup lost taxes are eligible for rewards. In addition, reward payments are optional and not subject to strict guidelines.

In contrast to a set percentage of recovered tax, "HMRC pays tip-offs on a case-by-case basis, determined by discretion," according to Park at Price Bailey.

He continues, "Whizzlers cannot predict whether their efforts will be rewarded because there is no published formula linking the quality of intelligence to the tax revenue secured."

Learn More About HM Revenue and Customs.