For years now HMRC has been “naming and shaming” people and companies caught deliberately evading tax of more than £25k. The lists make interesting (and alarming) reading – in September 138 “taxpayers” were caught evading £30m of tax and charged £18m of extra penalties. The individual penalties charged reached as high as £2.7m!
HMRC also recently published some research into how effectively the list serves as a deterrent for potential tax evaders. Unfortunately, the answer is not very – less than a third of us are even aware that the lists exist! Hardly surprising, since the list is only published on the gov.uk website, under a non-indicative name (“deliberate tax defaulters”). Some people have suggested that there might be more impact if the lists were published in local papers and websites for everyone to see. However, this wouldn’t put the pressure on either – only one in eight of us would stop speaking to someone we saw “named & shamed”.
So, what does work? Well, in an way ironically simple turn, the penalties themselves! 70% of us are aware of the realities of tax evasion and the penalties that come with it. With most of the defaulters interviewed by the researchers feeling that the penalties had far more impact, it seems that penalties are here to stay and looking at them would be the best option for deterring future evaders!