Everyone has his faults which he continually repeats: neither fear nor shame can cure them. Jean de La Fontaine
Those of you with a good memory may recall the initial focus on HMRC's name-and-shame powers back when FA 2009 was announced. We thought now would be a good time to bring you an update. The legislation was brought into effect by Treasury Order on 3 March 2010. It applies to Return periods starting on or after 1 April 2010 and failures or wrongdoings occurring on or after 1 April 2010 - so it's particularly relevant now that everyone is getting ready to file their first Tax Return under the new regime (2010/11 - due by 31 Jan 2012)
So who can be named?
The main criteria to be named and shamed are as follows:
- A relevant penalty within Schedule 24 Finance Act 2007 or Schedule 41 Finance Act 2008 must be incurred - in basic terms this means incurring a tax-geared penalty; and
- The taxpayers must be penalised for one or more deliberate or deliberate and concealed defaults; and
- The amount of tax evaded must be greater than £25,000. In working out whether this threshold is reached, all tax (of any sort, and for any year after 1 April 2010) which has been subject to a penalty for deliberate errors will be added together.
It is worth noting that even where the above criteria are met, HMRC will not publish details where individuals make a full disclosure to HMRC, either unprompted or immediately when challenged and cooperate fully throughout the course of the enquiries, thereby receiving the maximum penalty reduction available - so as always, if you have some outstanding issues from prior years we recommend you speak with a professional advisor. We have contacts that work exclusively in the tax investigations arena and are ex-HMRC inspectors so don't hesitate to contact us.
When, where and for how long will HMRC publish?
Publication is due to follow a strict set of rules:
- All the penalty decisions which underpin the scheme are appealable to an independent tribunal.
- No publication is possible until all appeals are concluded or opportunities to appeal have expired.
- The publication process will not form part of the enquiry process. At the conclusion of a compliance check the compliance officer will refer any case that meets the criteria for publication to a specialist team, which will ensure that:
- The taxpayer is notified in advance of HMRC's intention to publish, and the details to be published.
- The taxpayer will be given an opportunity to make representations, explaining why their details should not be published.
- The strict time limits are adhered to. HMRC must publish within 12 months of the penalty becoming final and cease publishing that information 12 months thereafter
HMRC has advised that they will publish all the details necessary to uniquely identify the person and the extent of their evasion. This may include the taxpayer's name, address, nature of business, period covered by the evasion, amount of evaded tax and the penalty for that evasion. The plan is to publish a list quarterly on the HMRC website with an accompanying press notice.
Ireland introduced a similar system about a decade ago; it was really only a matter of time before the UK followed suit. While HMRC only intend that the information be published for 12 months, the reality of the modern internet world is that the information is likely to remain in the public domain indefinitely. How that information will interact with other aspects of life (jobs, credit checks etc) remains to be seen.