Inside HMRC: Tip-Off Regime and New Whistleblower Incentives

In 2025, this regime was strengthened with enhanced rewards, encouraging individuals to report serious tax avoidance and evasion.

1. What Is the “Tip-Off” Regime?

HMRC’s tip-off regime allows members of the public to report suspected tax fraud or evasion. These reports are submitted through one of four main sources:

• HMRC’s online reporting portal
• A dedicated fraud hotline
• During an HMRC investigation into a third party
• Postal submissions

Reports can be made anonymously, though HMRC encourages named disclosures so they can follow up. Anonymous tip‑offs do not qualify for financial rewards.

2. HMRC’s Strengthened Whistleblower Reward Scheme

Insiders, or whistleblowers, are a key source of tip‑offs, often with direct knowledge of under‑declared tax. While this usually involves evasion, it can sometimes relate to genuine errors.

The UK has recently introduced a formal reward scheme, similar to the USA and Canada, for reporting serious tax avoidance or evasion. Where HMRC recovers at least £1.5m, rewards of 15–30% of the tax collected (excluding interest and penalties) may be paid.

These measures target large businesses, wealthy individuals and offshore structures, although rewards may take years due to the length of investigations.

HMRC have provided a list of those not eligible for the reward scheme, which includes:

• Individuals who obtained the information while employed as a civil servant
• The taxpayer involved in the tax evasion or avoidance, or those who planned and initiated the actions
• Situations where the information was already known to HMRC or could have been identified through routine processes
• Cases where there was a legal obligation to disclose or not disclose the information
• Individuals acting on behalf of someone else, or who obtained the information from someone who would not have been eligible

3. The Process: From Tip-Off to Investigation

The lifecycle of a tip-off typically involves several stages:

A.     Initial Assessment and Risk Profiling

HMRC reviews the information to determine credibility, relevance, and potential tax impact.

The information is fed into HMRC’s systems and matched against existing data. This may include:

• Declared income versus lifestyle indicators
• Bank and property data
• Sector-specific risk patterns

There is usually a human element within this review to ensure that the position is fully considered.

B.     Case Development

If there is a credible risk, HMRC will usually open a compliance check, either through a formal enquiry or informally if out of time.

In more serious cases, the Fraud Investigation Service may become involved, using Code of Practice 8 or 9. These investigations can last years and may involve formal information powers.

C.    Investigation and Outcome

Following the enquiry, once HMRC is satisfied that the matter has been suitably investigated (for example, identifying a tax risk or concluding the tip-off was incomplete and no tax is due), the possible outcomes are:

• No further action (if no tax is found to be due)
• Civil recovery of tax, interest, and penalties
• Criminal investigation and prosecution (in cases of identified fraud)

4. Safeguards and Risks

While tip-offs are a powerful tool, they also raise important considerations:

Reliability of information – Not all reports are accurate; some may be misinformed, malicious, or based on misunderstandings of tax rules

Impact on taxpayers – Being the subject of a tip-off can trigger compliance checks. Even where no wrongdoing is found, the process can be time-consuming and intrusive

Confidentiality Whilst HMRC has a general duty of confidentiality not to disclose the source of the tip-off, this can be overridden by a disclosure order or a data protection subject access request.

Takeaways for Taxpayers and Advisers

Tip‑off cases often require careful handling, including understanding the likely source and nature of the allegations to manage HMRC engagement effectively.

The strengthened reward regime means HMRC information may come from individuals, not just existing data, increasing the likelihood of investigations, particularly into evasion and serious avoidance.

For taxpayers, early advice is vital. Once an investigation begins and an initial response is given, options narrow and the risk of higher penalties increases if not handled properly.