HMRC set to name and shame tax defaulters

This year could see the first naming and shaming of deliberate tax defaulters by HM Revenue & Customs (HMRC), who will be able to publish details of those who have evaded tax.

The legislation was introduced in 2010, but has yet to be used. It applies to return periods starting on or after 1 April 2010, and to failures or wrongdoings from that date. Previously, HMRC could only publish details of tax evaders in criminal cases.

The scheme is aimed at the more serious cases of tax evasion; so for a taxpayer to be in danger of being named, the amount of tax evaded must exceed £25,000. This threshold is worked out by adding together all taxes that have been subject to a penalty for a deliberate error – and it is for all periods after 1 April 2010. Naming can apply to individuals, partnerships and companies, and the taxes covered include income tax, corporation tax, PAYE, capital gains tax, VAT, national insurance and inheritance tax.

Naming can only take place after a compliance check, so there are two ways that major tax evaders can avoid seeing their names in print. The first and most obvious option is to make a full and complete disclosure before the start of any check. The second approach is to make a complete disclosure at the start of a check and then to co-operate with HMRC afterwards. Such action should result in HMRC granting the maximum penalty reduction, and where it gives this, HMRC will not publish any details of the taxpayer.

Taxpayers will have the opportunity to make representations about why their details should not be published, although HMRC has said that details will be withheld from publication only in exceptional circumstances.

HMRC will publish details on its website, where they will remain for up to 12 months. It will provide the minimum amount of information necessary to identify the person or company – including addresses, as well as the amount of tax involved. In many cases, it is likely that the local press will publish details as well.

Publication can only occur as a result of a deliberate error rather than carelessness – so in future, HMRC can be expected to argue that more errors are deliberate. It remains to be seen when the first naming and shaming occurs, but given the start date, it is most likely to be for a VAT offence.

In this edition

This newsletter is for general information only and is not intended to be advice to any specific person. You are recommended to seek competent professional advice before taking or refraining from taking any action on the basis of the contents of this publication. The newsletter represents our understanding of law and HM Revenue & Customs practice as at January 2013.