Cash for information: How HMRC is paying for intelligence

In November 2025, HMRC launched the Strengthened Reward Scheme (SRS), an enhanced informant and reward scheme, marking a significant shift in the UK’s approach to tackling serious tax avoidance and evasion. This initiative, announced in the 2025 Budget, represents a deliberate move towards providing financial incentives for whistleblowers, closely modelled on established programmes in the US and Canada.

This blog is based on an article written by Michelle Sloane and Josh Wilder that was published in Tax Advisor on 19 February 2026.

Introduction

The stated aim of the SRS is to harness credible third-party information to uncover hidden non-compliance, reduce the tax gap, and strengthen HMRC’s enforcement capabilities. However, while the promise of increased compliance and deeper investigative reach is compelling, the introduction of a formal and generous reward system raises a host of operational, ethical, and resource challenges.

These include the potential for a dramatic increase in vexatious or opportunistic reports, the demands on HMRC’s capacity to effectively vet and act on information received, and the broader implications for enforcement culture in the UK.

This blog explores the likely impact of the SRS, both intended and unintended, and considers it within a broader global trend for incentivised enforcement.

The structure of the SRS

Under the SRS, individuals who supply information that enables HMRC to collect significant unpaid tax may receive a share of the revenue recovered. HMRC's official guidance states that a reward may be payable where information leads to the collection of at least £1.5 million in additional tax, with awards ranging from 15% to 30% of the amount collected (excluding penalties and interest). The SRS applies primarily to serious tax avoidance and evasion involving large corporations, wealthy individuals, or offshore structures. 

This represents a departure from HMRC’s historical approach, which was a discretionary and modest informant reward system. Prior to the 2025 reforms, HMRC paid out rewards for credible information relating to suspected fraud, but the amounts were limited and did not involve a percentage-based structure. 

In contrast, the US Internal Revenue Service (IRS) Whistleblower Program has paid out substantial awards (often between 15–30% of the recovered tax) and generated billions of dollars in additional revenue collections. Similarly, Canada’s Offshore Tax Information Program has shown the potential benefit of a structured incentive reward scheme. The SRS explicitly draws inspiration from these models.

Increasing credible disclosures 

One of the SRS’s principal aims is to increase the volume of credible disclosures made to HMRC. By aligning economic incentives with compliance objectives, the policy seeks to encourage insiders and other knowledgeable parties will relevant information, who might otherwise remain silent.

Confidential sources, such as employees of large businesses, tax professionals, or intermediaries with insight into avoidance schemes or tax evasion, now have a financial incentive to come forward. This could help HMRC penetrate opaque structures, uncover orchestrated avoidance strategies, and initiate enforcement actions that might not otherwise take place.

Moreover, linking rewards to the actual amount of tax recovered, provides a transparent and proportional incentive. Systems, such as the IRS's programme, have encouraged a steady flow of high-value reports and have generated billions in additional revenue. 

The rise of vexatious and opportunistic reports

Any system that offers potentially substantial financial rewards is likely to attract attention beyond the sphere of legitimate informants. Generous rewards may encourage vexatious, speculative, or opportunistic reports that allege wrongdoing but lack credibility or actionable evidence. 

Even before the SRS was introduced, the volume of HMRC tip-offs had increased substantially in recent years, with a record number of reports in 2024/25 but a decline in the average amount paid to informants, which suggests that many submissions lacked the substance necessary for further action to be taken by HMRC. 

A flood of low-quality reports risks diverting HMRC’s scarce investigative resources away from genuine cases, as investigators will have to sift through reports to identify actionable intelligence. It also raises the possibility of malicious reporting, where individuals lodge unfounded claims with the aim of simply causing upset for the person concerned.

Resource and operational challenges for HMRC

To maintain confidence and effectiveness, HMRC must allocate substantial resources to manage the anticipated volume of information it will receive from informants. This includes initial vetting, risk assessment, prioritisation and, where appropriate, referring matters to compliance divisions or criminal investigation teams within HMRC.

Unlike traditional enforcement investigations initiated by HMRC, third-party disclosures can arrive in a wide variety of formats, levels of detail, and evidentiary rigor. Establishing robust mechanisms to distinguish between genuinely valuable leads and spurious information, will be essential. HMRC’s enforcement teams may also need to enhance their expertise in data analysis, pattern recognition, and financial forensics, in order to handle this demand effectively.

Without adequate resource allocation, there is a risk of delays, which could erode confidence in the SRS. Those contemplating disclosure are more likely to participate in the SRS if they believe their information will be taken seriously and acted upon. Delays or opaque decision-making is likely to reduce participation in the SRS.

Balancing transparency and confidentiality

Another operational consideration for HMRC is how it balances the need for confidentiality with accountability. Safeguarding the identity of informants is often very important. At the same time, the system requires transparency in its reward decision-making process in order to foster confidence. This balancing act adds complexity to HMRC’s administrative workload and requires careful policy considerations.

Broader trends in enforcement: UK, US, Canada and beyond

The introduction of financial rewards for whistleblowers in tax matters aligns with a broader global trend across various enforcement bodies. In financial regulation and economic crime, agencies such as the Serious Fraud Office (SFO) and the Financial Conduct Authority (FCA) have expressed interest or taken preliminary steps toward incentivising whistleblowers. For example, in its annual business plan for 2025/6, the SFO has advocated financial incentives similar to those in the US, and FCA reports reflect ongoing engagement with the topic.

This trend mirrors the longstanding practice in the US under programmes like the IRS whistleblower scheme and the Securities and Exchange Commission whistleblower reward programme, which have demonstrated the potential of third-party intelligence to supplement traditional enforcement action. Canadian programmes, although operating on a smaller scale, with different eligibility criteria and payout bands than those in the US, similarly demonstrate how incentivised disclosure can contribute significantly to revenue collection and enforcement reach. 

The UK’s adoption of a percentage-based reward model reflects an acknowledgement that traditional investigation methods may no longer suffice in an era of complex international tax avoidance and digitalised economic activity.

Maintaining confidence 

To ensure confidence in the SRS, HMRC must ensure it operates with credibility, fairness, and accountability. Criteria for determining eligibility, reward quantum, and deciding borderline cases, must be clear and well-communicated. Discretionary decision-making should be informed by objective criteria.

Crucially, mechanisms for appeal or review, such as those available under the IRS whistleblower programme, would enhance trust among potential participants. Without appropriate avenues for redress, confidence in the SRS will be undermined.

Conclusion

The SRS is a bold and potentially game changing addition to the UK’s tax enforcement toolkit. By aligning financial incentives with compliance objectives, the SRS seeks to elevate the role of third-party disclosures in detecting serious tax avoidance and evasion. In doing so, it draws on established international models that have delivered significant results in other jurisdictions.