HMRC is planning an American-style “reward scheme” for taxpayers who alert the authorities to tax fraud and evasion. In a UK first, informants will receive compensation linked to the amount of money the taxman claws back under radical new plans inspired by similar schemes in the US and Canada.

The aim is to crack down on tax fraud and tax avoidance by large firms and wealthy individuals, according to MailOnline. Under current rules, HMRC invites taxpayers to snitch on people or businesses suspected of not paying enough tax or committing fraud.

But the taxman pays informers on a discretionary basis with amounts depending on the amount of tax recovered and time hours saved from investigations.

Exchequer Secretary James Murray is expected to announce the move in a speech marking the 20th anniversary of the Inland Revenue and HM Customs and Excise merging to form HMRC.

Mr Murray is also due to outline efforts to combat so-called “Phoenixism”, which sees rogue company directors dissolve their firms to avoid bills before starting them again under different names.

He told the Mail: “Everyone in Britain should play by the rules. We have zero tolerance for anyone who commits tax fraud or dodges their responsibilities.”

The minister explained that is why the Government is pushing ahead with its new US-style “whistleblower” reward scheme and its crackdown on anyone abusing company insolvency rules.

Mr Murray said by going further and faster in pursing those who break the rules the Government is making the system fairer for everyone else and delivering on Prime Minister Sir Keir Starmer’s Plan for Change by creating a “simple and modern tax system” that promotes economic growth.

Under the United States’ whistleblower system, people have to provide credible evidence leading to taxes, penalties or interest being collected.

Whistleblowers can receive 15% to 30% of the amount recovered, with rewards dropping to 10% if the information provided is already in the public domain, according to the Telegraph.

Price Bailey tax expert Andrew Park told the same publication adopting a US-style system is a “very good idea”. He added: “The change will inevitably lead to a huge increase in whistleblowing cases, and high-ticket cases blowing the whistle in large organisations.”

But he cautioned that the US system has led to authorities being swamped with tip offs.

HMRC paid out almost £978,256 to whistleblowers who provided actionable intelligence on tax fraud in 2023-2024, according to figures published by the Telegraph. This was an increase from £508,500 the previous year.