HMRC’s newly strengthened tax informant reward scheme — unveiled in last month’s Budget and launched with immediate effect — is facing an early backlash from business owners who warn it could trigger a wave of malicious claims and cost the Revenue far more than it recovers.
The scheme gives HMRC the power to pay informants 15–30% of additional tax recovered above a minimum threshold of £1.5 million, excluding penalties and interest. Officials say the measure is aimed squarely at uncovering credible intelligence relating to offshore structures, aggressive avoidance schemes, large corporates and ultra-high-net-worth individuals.
But business leaders fear the size of the potential bounty will encourage disgruntled former employees, sacked advisers, competitors and even ex-spouses to file spurious or vindictive reports, triggering long, expensive investigations that fail to yield any meaningful tax recovery.
HMRC stresses rewards are discretionary, not guaranteed, and could take years to materialise due to the complexity of major tax cases. Yet critics argue it is precisely this lengthy lag — and the obligation to assess every claim — that will create significant operational strain and unnecessary cost.
Tony Redondo, founder of Newquay-based Cosmos Currency Exchange, said the premise of the scheme is understandable — but the unintended consequences could be severe.
“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. 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, said the policy risks importing the worst elements of whistleblowing culture — without adequate safeguards.
“HMRC’s plan risks turning taxpayers into bounty hunters, and that cannot happen without strong protections. People can quite literally make things up, drag others through lengthy processes and even into court with little or no evidence.
The emotional and reputational damage is enormous — and once financial incentives are involved, the risks grow even further.”
Alsop-Hall called for HMRC to set out how baseless allegations will be filtered and what recourse or support will exist for individuals and businesses wrongly targeted under the scheme.
Although the scheme is intended to target large and complex cases, business leaders warn that speculative claims may not respect those boundaries — and every allegation, however flimsy, requires HMRC time, attention and often engagement with the accused.
The fear among SMEs is that the scheme may create an environment where unverified claims can trigger intrusive checks, reputational harm and costly professional fees, even when no wrongdoing exists.
HMRC has been approached for further clarification on safeguards and oversight mechanisms.
