March 29, 2024

In Battling Tax Dodgers, Britain Gives Shame a Try

On its Web site, Her Majesty’s Revenue Customs on Thursday published the names and addresses of accused tax cheats, along with the amount the department says they owe. The individuals and small businesses owe a combined £1.8 million, or $2.7 million, in fines and unpaid taxes. The department said the list would be updated every three months.

The campaign is intended to encourage Britons to pay their taxes in full and put pressure on tax dodgers to come forward, the government said, but some lawmakers and pressure groups argued that it failed to address the real problem in Britain: tax avoidance strategies used by large corporations.

“The publication of these names sends a clear signal that cheating on tax is wrong and reassures people who pay their taxes — the vast majority — that there are consequences for those who refuse to tell Her Majesty’s Revenue Customs about their full liability,” David Gauke, exchequer secretary to the Treasury, said in a statement.

Executives of Starbucks, Amazon and Google were questioned by lawmakers in November over concerns that the companies were not paying enough tax in Britain, given the sales they generate here. The companies responded that they had been unfairly singled out, but a month later Starbucks bowed to public pressure and said it would pay more corporate tax in Britain.

Going after tax cheats and making it harder for individuals and companies to find loopholes in the tax system is one of Prime Minister David Cameron’s top goals. At a time of austerity — and when average households are increasingly squeezed by rising electricity and food prices — the government is under pressure to be seen as doing more to limit tax evasion and avoidance. In January, Mr. Cameron said those avoiding taxes “need to wake up and smell the coffee.”

Britain missed out on £5 billion in revenue in the tax year that ended in 2011 because of tax-avoidance methods and about £4 billion from tax evasion, according to the tax authorities. The Public Accounts Committee, a group of lawmakers representing the largest political parties, called on the authorities Tuesday to consider naming and shaming those who promote tax avoidance strategies to make them less attractive to individuals and companies.

The nine names published on the Web site also include a wine merchant, a grocery store and a bus operator. UK Uncut, a campaign that combats tax avoidance, said the step showed the authorities “spent time and money going after small companies that avoid tax, but so far we’ve seen no serious action from the government to claw back the billions avoided by global giants.”

Chris Morgan, head of tax policy at KPMG in London, said the naming and shaming campaign was a “perfectly reasonable step” and would help to deter people from not declaring their full income. The tax bills of large corporations are a different matter because companies generally declare their income properly, he said, but their tax obligations can be interpreted in different ways.

Judith Freedman, a professor of taxation law at Oxford University, agreed.

“The people who have been named on the Web site deliberately evaded taxes” and were penalized for it, she said, adding that there was “no penalty you could levy against the big companies.”

“So far, no one has proven that they have done something wrong,” she said. “You might not like what they do, but it is no secret.”

Article source: http://www.nytimes.com/2013/02/23/business/global/britain-names-and-shames-accused-tax-scofflaws.html?partner=rss&emc=rss

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