The United Kingdom’s HM Revenues & Customs (HMRC) has announced plans to institute a whistleblower award scheme modeled on the United States’ IRS Whistleblower Program offering monetary awards to tax whistleblowers.
The HMRC has offered whistleblower awards previously but never paid them out in a systematic way. Last year, the HMRC paid out nearly £978,256 to whistleblowers who provided actionable intelligence on tax fraud. The IRS, by contrast, awarded over $88.7 million to whistleblowers during the 2023 Fiscal Year.
Under the IRS Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide information about tax fraud which leads to a collection of at least $2 million, are eligible for awards of 15-30% of the funds collected. Since 2007, tax whistleblowers have allowed the IRS to collect over $6.9 billion.
“Everyone in Britain should play by the rules. We have zero-tolerance for anyone who commits tax fraud or dodges their responsibilities,” said James Murray, a Treasury minister, according to the Telegraph. “That is why we are pushing ahead with our new US-style ‘whistleblower’ reward scheme, and our crackdown on anyone abusing company insolvency rules.”
“The UK’s new tax whistleblower law is the most significant breakthrough in tax accountability since UBS was forced to disclose thousands of US taxpayer names in the Birkenfeld prosecution,” said whistleblower attorney Stephen M. Kohn, partner at Kohn, Kohn & Colapinto and attorney for UBS whistleblower Bradley Birkenfeld.
“The UK’s new system is modeled after highly successful U.S laws which permit every banker in the world to confidentially report their banks and clients to the appropriate authorities and obtain large financial rewards,” Kohn added. “A similar US law targeting US taxpayers forced UBS to pay a $780 million find and turn over the name of thousands of US account holders.”
“The UK has now modeled a tax whistleblower and reporting system on this highly successful framework,” continued Kohn. “It is a major step forward for tax accountability and the ability to hold large banks and millionaires accountable to honest taxpayers.”
The HMRC’s announcement is a major development as the UK continues to reconsider its use of whistleblower awards. In December, the prestigious UK think tank the Royal United Services Institute (RUSI) released a report calling for a whistleblower award program in the UK. The RUSI report examines the successes of U.S. whistleblower award programs and states that the United Kingdom should end its “long-held antipathy” towards paying whistleblowers because such a program could play a “pivotal role” in reducing white-collar offences.
The RUSI report backs up repeated calls for whistleblower awards in the UK by Nick Ephgrave, Director of the Serious Fraud Office (SFO) “I think we should pay whistleblowers,” Ephgrave said in February.
