Section 94 adds to HMRC's already considerable penalty regime and allows HMRC to publish the names and details of individuals and companies who are penalised for deliberate defaults leading to a loss of tax of more than £25,000.
The Explanatory Note accompanying the legislation states the objectives of the regime:
"Publishing details (including names) aims to deter deliberate tax defaulters; reassure those who do not pay the right tax; and encourage those who do not, to come forward and bring their tax affairs up to date".
It is clear that only those who are penalised for deliberate defaults will have their names and details published, not those penalised for having failed to take reasonable care, as HMRC aim to clamp down on those who deliberately evade tax.
The information that HMRC may publish includes:
- the person's name (including any trading name, previous name or pseudonym);
- the person's address (or registered office);
- the nature of any business carried on by the person;
- the amount of the penalty or penalties and the potential lost revenue in relation to the penalty;
- the periods or times to which the inaccuracy, failure or action giving rise to the penalty; and
- any such other information as the Commissioners consider appropriate to publish in order to make clear the person's identity.
When determining the penalties to be applied in respect of deliberate defaults, there will be a presumption towards publishing information but HMRC can decide whether it is appropriate to do so in the circumstances. HMRC aim to publish information quarterly on their website but as the measure only applies for periods starting from 1 April 2010, it is not expected that any names will be published before the first half of 2011.
HMRC must publish the information within 12 months of the penalty becoming final and remove the information 12 months thereafter. A defaulter's information could therefore be publically available for some time after the default in question.
It is clear that this regime will significantly impact on the taxpayers' right of privacy. This has been recognised by the various safeguards in place to ensure only a necessary and proportionate interference with the right to privacy.
The legislation encourages taxpayers to disclose wrong-doing, providing an exemption from publication for those who make full disclosure of any tax wrongs, whether prompted or unprompted by HMRC.
For those who have been penalised and are caught by section 94, HMRC must notify them and allow a reasonable opportunity for representations to be made. This is supported by a right to appeal to an independent tribunal against all elements of the penalty, which would ultimately determine whether the taxpayer's name would be published. No information would be published until all appeal opportunities are concluded or expired.
The advice from HMRC is that taxpayers should come clean about deliberate tax offences to avoid being named and shamed. Otherwise, it is likely that the writing's on the HMRC website for those who deliberately default on tax.