Cynics are predicting that such ‘cowboy’ organisations may regard it as a badge of honour, and good for business to be named and shamed and included on the list.
Meanwhile, and coming to the end of its first year, the fourth and final list for 2013 of deliberate tax defaulters was published by HMRC last week – and it is safe to assume that none of those named is revelling in what is likely to be very unwelcome publicity.
The fourth list bears a close resemblance to the first three, with pubs, takeaway outlets and the construction industry featuring prominently, and one wonders whether the impact of naming and shaming will reflect the law of diminishing returns over time as observers scan the list and mutter ‘same old same old…’
Groucho Marx once said that he would refuse to join any club that would have him as a member. The membership of the PDDD (Publishing Details of Deliberate Tax Defaulters) Club is restricted to those who incur penalties for deliberate behaviour – typically an omission from a tax return – where the tax understated is more than £25,000.
Naming and shaming can still be avoided if the defaulter comes clean and earns the maximum reduction in penalties for ‘telling, helping and allowing HMRC access to documents’ – in other words, making full disclosure when challenged. So HMRC would argue that those who end up on the list are the real ‘baddies’ who simply won’t play the game by HMRC’s rules.
Whether naming and shaming is truly helpful, however, may be hard for HMRC to evaluate.
Mike Down is head of tax risk and investigation at Baker Tilly