People who report individuals and firms will receive payments linked to the amounts clawed back.
The scheme is inspired by similar ‘whistleblower’ models in the US and Canada and will complement the existing HMRC rewards scheme, which pays cash to people providing evidence of tax fraud.
James Murray, Exchequer Secretary to the Treasury, announced the move to tax experts hosted by the Chartered Institute of Taxation and the Institute of Chartered Accountants for England and Wales in a speech to mark the 20th anniversary of HMRC.
Under the plans, informants could take home a “significant amount of compensation”, with payments in proportion of the tax take, ensuring that the scheme raises more money than it costs.
Work is ongoing regarding what percentage this could be and further details will be set out in due course.
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At the Budget in October, the Chancellor announced an injection of more than £1.5bn in HMRC to recruit and fund an additional 5,000 new compliance caseworkers and 1,800 debt collection officers.
Murray said that this, alongside investment to modernise HMRC systems and legislation to tackle non-compliant tax avoidance and prevent non-compliance, will raise £6.5bn per year by 2029/30.
The plans come after MPs accused HMRC of “underestimating” the £5.5bn per year cost of tax evasion.
HMRC already asks taxpayers to report individuals or businesses that they suspect are underpaying tax or committing fraud.
Other tax changes
Murray also announced plans to improve HMRC customer service. This includes trialling the use of generative AI to point taxpayers to the advice they need on Gov.uk.
There will also be a trial of a system where taxpayers can use their voice as their password to pass security checks when they call HMRC. Following an evaluation of the trial, it is expected to be rolled out across HMRC over the rest of this year.
Other announcements include easier access to tax relief on temporarily imported fine art and antiques often shown in galleries and exhibitions, boosting the sector’s international competitiveness.
There are also plans to tackle ‘phoenixism’ – where rogue directors avoid payment of company tax by going insolvent.
HMRC and the Insolvency Service have agreed a joint plan, which includes an increase to the use of securities, where HMRC asks for upfront payment of tax from new companies, making more rogue directors personally liable for the taxes of their company.
