Budget 2009 - numpty list

BN63 confirms there is to be a naming and shaming of tax defaulters. The names of all individuals and companies (including those acting in the capacity of executors or trustees) who are penalised for a loss of more than £25,000 tax will be put on a publicly available list, presumably on the HMRC website.

It is said that the defaulter's name will remain on the public register for one year but, in reality, it will be known for much longer because professional firms involved in due diligence work, will keep their own ongoing versions of the register for use as a scoping tool in acquisitions or investigations related work.

To qualify for inclusion on the list, taxpayers will have to be penalised for not just a loss of tax (which will include all direct and indirect taxes, but not tax credits) but for the loss to be attributed to a deliberate error or a deliberate and concealed error. These expressions are found in the FA 2007 penalty regime, now coming into effect, and represent the more severe half of the four new grades of penalty.

There will be little difficulty in establsihing what is a deliberate and concealed error. But the lesser type of error, being one which is merely deliberate (but not concealed) may prove to be where many an argument rests with HMRC. This was always going to be the most fertile territory for argument, because the potential grey area between a careless inaccuracy (max penalty 30%) and a deliberate inaccuracy (max penalty 70%) would be argued up by HMRC and down by the taxpayer or their adviser.

Now, however, the stakes will now be higher than merely the extent of the financial cost, given that tax, of however large an amount, lost through only careless inaccuracy wil not qualify the taxpayer for inclusion on the public list whereas tax (of £25,000 plus) lost through deliberate inaccuracy will attract the additional sanction of publication.

There will, and regardless of the reason for the loss of tax, be statutory exemptions from publication for those taxpayers who volunatrily disclose their transgressions to the Revenue and, aditionally, those who do not volunatrily disclose but who do co-operate fully when caught.

So, all told, you will have to be a right numpty to find your name on the register. That having been said, for the policy of naming and shaming to serve its intended deterrent purpose, someone will have to go first and there will need to be some poor souls to be held up to public ridicule for the benefit of the wider good.

The register will make public four types of data, being: name and address; trade, profession or sector; amount of tax etc; and period covered. We would mischievously wonder over whether the CIF teams at HMRC are pondering over the targeting of a suitably useful collection of people to be humiliated ? A Big 4 accountancy firm or a Magic Circle firm of solicitors would be fun.

The register will be introduced after April 2010 being, not by accident, when the next disclosure initiative is expected to end.