HMRC has named ‘deliberate tax defaulters’ on its website for the first time, under a power introduced almost four years ago. The government said publication sent a ‘clear signal that cheating on tax is wrong’, but some commentators criticised the decision to publish the names and addresses of nine small businesses.
Earlier this week the Commons public accounts committee said HMRC should ‘name and shame’ promoters of marketed tax avoidance schemes, and the government announced a new ‘disclosure facility’ that will give UK-resident investors in undisclosed Isle of Man bank accounts an opportunity to settle their tax liabilities without any publicity. That facility does not include any guarantee, however, against criminal investigation for tax-related offences.
HMRC’s list includes a hairdresser and a knitwear manufacturer. The Financial Times quoted Ronnie Ludwig, a partner at accountants Saffery Champness, as saying: ‘There are many companies and individuals earning a lot more money than these people. The question we need to ask is whether the Revenue is operating a level playing field. Someone with a “million-pound problem” is likely to take specialist advice and will be advised to make a disclosure to avoid being publicly named and shamed.’
An HMRC spokesman said: ‘We treat all taxpayers even-handedly irrespective of their size. Evasion is evasion and we enforce the rules irrespective [of] the size or nature of the taxpayer. The vast majority of taxpayers play by the rules and identifying those who choose not to helps level the playing field. We can name deliberate defaulters under very specific conditions where tax over £25,000 has been deliberately evaded.'A ‘deliberate defaulter’ is, broadly, someone who incurs a ‘relevant penalty’ for an inaccuracy in a return, a failure to comply with certain obligations, or a VAT or excise ‘wrongdoing’.
HMRC said deliberate defaulters can be named where, during an investigation into a period starting on or after 1 April 2010:
it is established that the taxpayer is liable to a penalty for a deliberate default, and
as a result of the deliberate default, more than £25,000 of additional tax would have been lost without HMRC’s intervention, and
the taxpayer has failed to make a full disclosure to HMRC at the outset, so failing to receive the maximum possible reduction in penalties for full and early disclosure and assistance.
The legislation requires HMRC to ensure that it publishes names for only 12 months. The department published names and addresses but pointed out that ‘it should not be assumed that tax defaults are currently taking place at the published address or by the published person’.
Exchequer secretary David Gauke said: ‘HMRC is dedicated to clamping down on the small minority of people who break the law, and finding and taking action against tax cheats who try to evade their responsibilities.
‘The publication of these names sends a clear signal that cheating on tax is wrong and reassures people who pay their taxes – the vast majority – that there are consequences for those who refuse to tell HMRC about their full liability. It also encourages defaulters to make a full and prompt disclosure and cooperate with HMRC to avoid being named.’
HMRC has named ‘deliberate tax defaulters’ on its website for the first time, under a power introduced almost four years ago. The government said publication sent a ‘clear signal that cheating on tax is wrong’, but some commentators criticised the decision to publish the names and addresses of nine small businesses.
Earlier this week the Commons public accounts committee said HMRC should ‘name and shame’ promoters of marketed tax avoidance schemes, and the government announced a new ‘disclosure facility’ that will give UK-resident investors in undisclosed Isle of Man bank accounts an opportunity to settle their tax liabilities without any publicity. That facility does not include any guarantee, however, against criminal investigation for tax-related offences.
HMRC’s list includes a hairdresser and a knitwear manufacturer. The Financial Times quoted Ronnie Ludwig, a partner at accountants Saffery Champness, as saying: ‘There are many companies and individuals earning a lot more money than these people. The question we need to ask is whether the Revenue is operating a level playing field. Someone with a “million-pound problem” is likely to take specialist advice and will be advised to make a disclosure to avoid being publicly named and shamed.’
An HMRC spokesman said: ‘We treat all taxpayers even-handedly irrespective of their size. Evasion is evasion and we enforce the rules irrespective [of] the size or nature of the taxpayer. The vast majority of taxpayers play by the rules and identifying those who choose not to helps level the playing field. We can name deliberate defaulters under very specific conditions where tax over £25,000 has been deliberately evaded.'A ‘deliberate defaulter’ is, broadly, someone who incurs a ‘relevant penalty’ for an inaccuracy in a return, a failure to comply with certain obligations, or a VAT or excise ‘wrongdoing’.
HMRC said deliberate defaulters can be named where, during an investigation into a period starting on or after 1 April 2010:
it is established that the taxpayer is liable to a penalty for a deliberate default, and
as a result of the deliberate default, more than £25,000 of additional tax would have been lost without HMRC’s intervention, and
the taxpayer has failed to make a full disclosure to HMRC at the outset, so failing to receive the maximum possible reduction in penalties for full and early disclosure and assistance.
The legislation requires HMRC to ensure that it publishes names for only 12 months. The department published names and addresses but pointed out that ‘it should not be assumed that tax defaults are currently taking place at the published address or by the published person’.
Exchequer secretary David Gauke said: ‘HMRC is dedicated to clamping down on the small minority of people who break the law, and finding and taking action against tax cheats who try to evade their responsibilities.
‘The publication of these names sends a clear signal that cheating on tax is wrong and reassures people who pay their taxes – the vast majority – that there are consequences for those who refuse to tell HMRC about their full liability. It also encourages defaulters to make a full and prompt disclosure and cooperate with HMRC to avoid being named.’
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