Serial tax avoiders could be 'named and shamed'

HM Revenue & Customs is looking into ‘naming and shaming’ people who persistently avoid paying their ‘fair share,’ in a move that an accountancy body is warning against.

In its new consultation paper, Strengthening Sanctions for Tax Avoidance, HMRC asks whether publicly naming “serial avoiders” would be effective and proportionate.

Although the department says in the paper that it recognises that such a naming power would require “especially careful handling,” the mere mention of it has unsettled the ACCA.

“It sets a dangerous precedent to ‘name and shame’ taxpayers who are acting within the law,” said Chas Roy-Chowdhury, head of tax at the Association of Certified Chartered Accountants.

The association says that while it understands HMRC’s frustration at people who try to bend its rules, it believes ‘loopholes’ within the tax system should exist if they incentivise a specific element of business.

Mr Roy-Chowdhury added: “Rather than looking at ways to introduce more punitive punishments on to those looking to exploit the myriad complexities of our taxation system, the government would be better served focusing its efforts on bringing greater clarity and simplicity to the system”.

In the HMRC document, open for responses until March 12th, the department asks if publicly naming serial avoiders would be helpful as a way of “encouraging behaviour change.”

But in addressing why this and other new measures in the document are being consulted upon, the document’s foreword seems to suggest that the naming probably won’t help.

In fact, Treasury minister David Gauke writes at the outset: “There remains a small but hardened core of tax avoiders who…remain indifferent to public outrage at tax avoidance”.

Such individuals, he adds, are determined to try to pay less tax at every opportunity and in being determined to that end, make “every effort to undermine the intentions of Parliament.”

To combat them, HMRC has set up the new Serial Avoiders Unit (SAU), designed to “identify and tackle users of multiple avoidance schemes.”

The SAU will represent a new, single point of contact service via a phoneline to help people who have used multiple schemes but who want to get their tax affairs in order.

In addition, new financial costs for serial avoiders could be introduced, such as a surcharge that would be imposed when a certain number of schemes are used over a certain period.

Fresh reporting requirements on users of multiple schemes that fail are another prospect, as are new penalties for cases where the General Anti-Abuse Rule (GAAR) applies.

Again though, the ACCA has reservations.“The government should be mindful of the potential for harm when it comes to repositioning the GAAR towards becoming more of a ‘catch-all’ rule rather than one targeting clear abuse,” it said. “Taxation is a legal matter not a moral one.”

Elsewhere in the consultation paper, the Revenue says that more than 3,000 Accelerated Payment Notices have been issued (as of January 9th 2015), representing just over £1bn tax in dispute and in excess of £99m has been received.

It adds that over  the period to the end of March 2016, HMRC is planning to issue a total of 43,000 notices requiring payment of over £7.1bn. Its director-general of enforcement and compliance Jennie Granger reflected:

“HMRC is determined to clamp down on the small number of people who engage in tax avoidance. As part of this, HMRC is increasing its focus on users of multiple schemes and increasing the level of resource and intensity devoted to tackling these avoiders.”

Editor’s Note: Related Reading

Contractors’ Questions: Can HMRC ‘name and shame’ me?

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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