HMRC regularly publishes the names and addresses of what it terms ‘deliberate tax defaulters’ on their website. Although formally called the “list of deliberate tax defaulters”, it is more commonly known and referred to as ‘naming & shaming’.

HMRC can decide to publish information about a deliberate tax defaulter where an investigation results in a ‘deliberate’ penalty and the tax on which the deliberate penalty is charged is £25,000 or more. HMRC can publish details of deliberate tax defaulters and these are people who have received penalties either for deliberate errors in their tax returns or deliberately failing to comply with their tax obligations.

You can avoid being ‘named & shamed’ even if you are charged with a deliberate penalty on tax of £25,000 or more but only if your conduct during the investigation and the nature of the tax irregularities (or as HMRC call it telling, helping, giving) enables you to receive the maximum reduction of the penalties within the permitted range for a deliberate penalty. The penalty range for a deliberate penalty starts from 35% (or 20% for an unprompted voluntary disclosure) up to 100% and is charged on the ‘Potential Lost Revenue’ or, in other words, the tax undeclared.

If you meet the criteria for the naming & shaming regime, your details, including your personal or trading name, address, and the amounts of tax and penalty charged, will appear on the HMRC website for 12 months.

The current list of deliberate tax defaulters as published by HMRC is updated every quarter. This can provide for some interesting reading. For example, the amounts of tax undeclared and ensuing penalty can be fairly substantial.

For example, The Nameless Ltd (who ironically have now been named) is a digital record label from West London being charged a sizeable £3.8m penalty on tax of £4.6m.

Penalty levels can differ depending on the co-operation, or lack of, provided during the course of an investigation. The following two examples, which both charged broadly the same amounts in tax, are a case in point as the penalty charged differed by £850k.

In the highly publicised case, Bernie Ecclestone was charged a penalty of £1.35m on tax also of £1.35m. Seemingly a 100% penalty although there will of course be much more to that case than will ever be published.

Contrast Bernie Ecclestone’s case with that of Audal Trading UK Ltd, who were charged a penalty of £500k against undeclared tax of £1.38m.

It is fairly unusual to be charged a penalty even close to the maximum 100% but the current list discloses a fair number of penalty charges if not at 100% then fairly close to it.

Is this representative of HMRC catching up with truly more serious tax defaulters or is this more indicative of a much firmer position being taken by HMRC when it comes to charging penalties and settling cases of this nature?

In summary, HMRC’s penalty powers are extensive and include the ability to publicise the details of businesses and individuals who are deliberate tax defaulters on their website. Careful management and handling of any investigation involving potentially ‘deliberate’ behaviour by an experienced specialist while sometimes helping to reduce the tax, can certainly help to also potentially avoid the additional and unwelcome surprise of publicity courtesy of HMRC.

If you are concerned about the implications of HMRC’s policy on publishing the details of serious tax defaulters or require advice concerning any investigation by HMRC then please get in contact by calling us on 0800 001 6686 or by email at info@independent-tax.co.uk for a no obligation consultation and for more information.

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