The taxman is allowed to override confidentiality to name and shame tax evaders, if the taxman thinks there was a tax fraud of more than £25,000. Every 3 months HMRC publish the names and “sufficient further information” to allow tax fiddlers to be identified.
Details are published of an individual or company director has not made a full disclosure to HMRC (e.g. prompted disclosures under the HMRC Code of Practice 9, Contractual Disclosure Facility procedures).
This punishment by public denunciation is on top of potential 100% penalties for “deliberate understatement”. Where an offshore bank account – or other asset – is involved, penalties start at 100% of the tax and go up to an eye watering 300%!
The details published are the “minimum necessary” to identify the person and the offence: e.g. name, address, nature of business, period covered, amount of tax and penalty. The Tax Offenders Register is then posted on the HMRC website every 3 months. The HMRC Press Office contact local newspapers and encourage them to publish the details of the tax fraudsters in their area.
The Tax Offenders’ Register entries can be in addition to placing the taxpayer in The Managing Deliberate Defaulters Programme.
How could it affect me?
Major worries to any business proprietor “named and shamed” on the tax offenders register include the potential for: credit refusal from lenders and suppliers; loss of customers’ goodwill; refusal by customers to pay in advance or leave deposits; a negative impact on the valuation of the business. The impact on families and employees could also be extremely stressful.
What safeguards will there be?
- The decisions which underpin the scheme can be appealed to the independent Tax Tribunal. If the Tribunal feels there is no evaded tax, or that the understatement was not deliberate, then the taxman cannot use ‘Naming and Shaming’;
- Publication is not allowed until all appeal opportunities are finalised;
- The taxpayer must be notified and given reasonable opportunity to make representations;
- The taxpayer will be sent an advance copy of the details HMRC intend publishing;
- HMRC must publish within 12 months of the penalty becoming final and remove material from their website 12 months later;
- HMRC will not publish the taxpayer’s home address if he can be identified without it and without potential for him to be confused for another person;
- HMRC will not publish at all in certain exceptional circumstances, after taking into account representations by the taxpayer.
- However, the way to completely avoid the risk is to make a full disclosure of all tax irregularities.
How can Lynam Tax Enquiry Experts help me?
If you are undergoing a tax investigation or a compliance check then specialist help from Lynam Tax Enquiry Experts could save your blushes and your business. Plus, our massive experience will almost certainly save you tax and penalties as well.
*For a free, confidential chat about your tax affairs, don’t delay, call Paul Lynam now on 0845 643 9997
or Andrew Nutbrown on 07718 778710