HM Revenue & Customs’ newly strengthened tax informant reward scheme, launched immediately following last month’s Budget, is drawing criticism from business leaders who warn it could lead to a surge in malicious claims and create significant costs for the Revenue.
The scheme allows HMRC to pay informants between 15% and 30% of additional tax recovered from major cases, above a minimum threshold of £1.5 million, excluding penalties and interest. Officials say the initiative targets credible intelligence relating to offshore structures, aggressive avoidance schemes, large corporates, and ultra-high-net-worth individuals.
However, some business owners fear the prospect of substantial financial rewards may encourage disgruntled former employees, ex-advisers, competitors, or even ex-spouses to submit exaggerated or vindictive reports. Critics say such claims could trigger lengthy investigations that fail to recover significant tax revenue.
HMRC has stressed that rewards are discretionary, not guaranteed, and may take years to materialize due to the complexity of major tax cases. Still, opponents argue that the obligation to assess every claim could create operational strain and unnecessary expense.
Tony Redondo, founder of Newquay-based Cosmos Currency Exchange, acknowledged the scheme’s intent but warned of unintended consequences. “In theory, the Strengthened Reward Scheme is a no-brainer. But in practice, I fear a lot of time and cost will be wasted on spurious investigations as disgruntled ex-employees, embittered ex-spouses and sacked advisers dob in their targets via exaggerated, malicious or outright vindictive tip-offs,” he said. “HMRC will have to sift through all of it, and taxpayers will foot the bill.”
Sam Alsop-Hall, chief strategy officer and co-founder of Birmingham-based Clive Henry Group, described the policy as risky, noting that financial incentives could intensify the impact of false allegations. “HMRC’s plan risks turning taxpayers into bounty hunters, and that cannot happen without strong protections,” he said. “People can make things up, drag others through lengthy processes and even court, often with little evidence. The emotional and reputational damage is enormous, and the risks grow when money is involved.”
Alsop-Hall called for clearer guidelines on how baseless claims will be filtered and what protections will exist for individuals and businesses wrongly targeted under the scheme.
While the reward system is intended to focus on large and complex tax cases, critics fear that speculative claims may fall outside these parameters, forcing HMRC to expend time and resources on allegations that lack merit. Small and medium-sized enterprises are particularly concerned about intrusive checks, reputational harm, and professional fees, even when investigations uncover no wrongdoing.
HMRC has been approached for further comment on safeguards and oversight mechanisms to prevent abuse under the new reward scheme.
