Accountancy Age (and many others) have reported:
HM Revenue & Customs have today published the names of tax defaulters on their website for the first time.
As they also note:
The publication has come soon after Margaret Hodge, Public Accounts Committee chair and Labour MP, claimed that a "name and shame" system would "discourage" deliberate tax defaulters.
I suggest that is no coincidence. It's also days after I pointed out HMRC's failure to use this power, and others available to it.
But what is really notable about the list of names published is how very odd it is. Most come from the north west of England. Why is that? Builders, coach operators and hairdressers feature, but no one, rather oddly,who looks as though they might go near transfer pricing or intellectual property, even though HMRC say they collect billions a year investigating such issues. Nor does anyone look to be named for offshore tax evasion. But then that's done by the sort of people who negotiated themselves into the anonymous low penalty Liechtenstein Disclosure Facility. How convenient.
In fact there appears to be a new rule emerging here that worries me. Leona Helmsley once said 'only the little people pay tax'. I fear it may now be true that only the little people will be named and shamed for not paying tax. Oh, and those from the north west.
However looked at, whilst I wholeheartedly approve of naming tax evaders there is something that leaves me distinctly uncomfortable about this list.
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Regretably I find this completely prdictable. These People are never going to hold up their schoolfriends and buddies to public scrutiny. After all who else will give them a well paid directorship when the people of this country finally turf them out of government.
Try reading s94 FA 2009. This might also help,http://www.hmrc.gov.uk/compliance/cc-fs13.pdf and perhaps the HMRC guidance at http://www.hmrc.gov.uk/about/tax-defaulters.htm
I have read it, of course
Users of failed tax avoidance schemes should be named also. What’s more, the names of the QCs who blessed those schemes should be published as a mark of their incompetence.
you are right – its also a very short list !
Breathtaking hypocrisy! How about naming and shaming the millionaire tax evaders in the disc HMRC bought from the Swiss whistleblower in 2006 or those in the list they paid the HSBC whistleblower for last year?
It is interesting that by looking at the default dates one can deduce that of the nine cases listed, five of them must relate to VAT penalties, not direct taxes
Richard, how about a campaign by TJN for the publication of the lists of the offshore tax evaders HMRC are shielding. Clearly they evaded much more than £25,000 and so come within the terms of this legislation that specifically authorises naming and shaming? It’s time to put real pressure on this duplicitous govt!
The problem as I see it is that HMRC are restricted by the legislation.
s.94 FA09 states that tapayers details may be published only where they have incurred a penalty. Penalties are charged under Schedule 24 FA07 and fall into defined categories. A penalty cannot be charged if a person has submitted an inaccurate return despite having taken reasonable care.
So, let’s have a think about what that means for those engaging in arbitrage/offshore shenanigans/transfer pricing manipulation… They’re going to be big organisations that will have developed their Transfer Pricing strategies by running it by their tax teams, legal departments and (probably) getting the opinion of a QC. Even if the result of these steps is that the Transfer Pricing methodology has 99% of the profit booked in Holland (or somesuch), and HMRC might (quite rightly) think that this is a cynical and aggressive tax avoidance scheme, there can be no denying that the company has taken reasonable care to make sure they can defend their position before they do anything.
So, it’s going to be very difficult for HMRC to convince a tribunal that the incorrect return (which, in the case of Transfer Pricing is somewhat a question of ones interpretation) is a result of what use to be called “negligence”. The company will say they’ve asked all the right people and arrived at the conclusion that their treatment is correct – what more do you want, Mr Inspector? (Of course, this doesn’t comment on whether or not the company has asked the right people the right questions or not, but that’s another story!)
So, HMRC and the company will get into a fight over the TP Treatment and HMRC may well win – the profits should ALL have been booked un the UK as there was only a Brass Plate in Rotterdam (or somesuch) and the company will put their hands up and pay the extra CT plus interest – but they’ll be able to say that the further tax due was as a result of a difference of opinion between HMRC and themselves, not because they’d been negligent.
Given the above scenario, Schedule 24 FA07 doesn’t allow a penalty. If there’s no penalty, s.94 FA09 says HMRC can’t publish details.
Now, if HMRC were allowed to publish details of anybody using a marketed avoidance scheme (whether it worked or not), THAT’d be something…
But the Revenue took powers to charge penalties even when Counsel’s opinion had been taken several years ago
I agree TP is hard but let me assure you with certainty that if adjusted in a smll business a penalty would always be due
Why not for big?
Getting it wrong is deemed negligence for one and not the other
Small businesses are exempt from the transfer pricing rules (with some exceptions) – TIOPA 2010, section 166.
The exemption has always puzzled me. I always advise people to follow the rules anyway, as a matter of best practice, but strictly speaking they don’t need to.
You say you’ve read the legislation. Please read it again. Names can only disclosed where there is a penalty for deliberate inaccuracy or deliberate failure. Negligence has nothing to do with it.
Incidentally the power to publish only applies to penalties for return periods starting on or after 1 April 2010, so it’s not really surprising that we are seeing the first names about now.
You mean you hink transfer mispricing isn’t deliberate?
Or that money in Switzerland was not?
Please do not be stupid. I’m not. The public aren’t
In practice avoidance scams are not treated as deliberate if they are backed by `sick notes` such as those that come out of Pump Court.
Please don’t be abusive.
Your comment talked about negligence. That was incorrect and I put you right. You should recognise that and not reply with an insult.
If you have some evidence that any company has deliberately misrepresented its transfer pricing liability to HMRC, I am sure both HMRC and the public would be interested to see it. But that’s not really relevant to this discussion which was about the publication of details under a specific statutory power. If a penalty has not been imposed for a deliberate inaccuracy for a period after 31 March 2010 or a deliberate failure after that date, the details can’t be published. Transfer pricing enquiries for the year to 31 March 2011 needn’t even be started for at least another month, so the chance of any having been settled with or without a penalty for deliberate inaccuracy is close to zero.
Transfer pricing is done in real time for many larger companies
And the LDF is ongoing
Respectfully, utter nonsense again from you
That’s not abuse: that’s fair expression of boredom we all suffer in the face of the continuing excuses of a tax profession that has largely captured the legislative process
Some TP work is now done in real time, but if HMRC object to a company’s pricing then they have to open an enquiry to do anything about it. You can only sign off on it in real time if HMRC are happy with it, in which case you wouldn’t be seeing any naming and shaming.
I know HMRC have argued with their business record checks that they can impose in-year penalties without waiting for the return to be filed, and if they can then by extension they could do that with transfer pricing. But of course there is significant doubt about whether they’re actually able to impose any penalties: certainly enough for any reasonably-sized business to take them to tribunal about it, and that would delay things well past now.
A March 11 year end need only file in March 12, and that leaves only a few months for the enquiry to get to tribunal. Even if the company and HMRC were trying their best to get it resolved as soon as possible they’d struggle to get it done by now, and that seems highly unlikely if naming and shaming is on the cards. Especially as you can’t name and shame while the possibility of appeal exists.
Doesn’t your work on extrapolating the tax gap use VAT data to estimate the level of direct tax that is evaded. Which would then imply that the majority of tax evasion is done by small businesses of the type that have now been named?
I don’t dispute tax evasion is a big issue
I am talking the selection of this sample of nine
And there were a great many to choose from suggesting serious bias in the choice
I’m not surprised! This is just another indication that HMRC have been captured by the big 4 and big business.
It’s easy to vilify the working class. After all they don’t pay your fees. I’m sure Owen Jones wouldn’t be short of a few words to say on this issue!
great stuff. a govt dept will not print names that are in the lime light as they can get sued for privacy breach. So under (privacy which the english love) is for the purpose of hiding those who have been involved with tax havens. the majority of the tax havens are british colonies/protectorate, etc. Blame the English govt that allowed this to happen (many colonies England “stole” from their colonies after they forcefully took ‘other coloured’ races land and sent some of it to England and the rest disappeared). all this happened after WW1 n WW2. the english did not leave any people alone – so the monarchy & the queen should be charged with treason, crimes against humanity, racism,slave drivers, etc. So nothing is new. English been doing this for years – looting and stealing from others and claim it to be British, so now you have to suffer, like english made millions of indians and africans suffer, de-humanising people around the world. So pay the tax price. nothing will happen, the banks are in it knee deep and they spew in $$dollars in the tax office, govt yells and nothing happens.