HMRC’s Naming & Shaming tool: PDDD

HMRC's naming & shaming - PDDD

Under section 94 of the Finance Act 2009, HMRC have the power to publish the names and details of deliberate tax defaulters (“PDDD” aka HMRC’s naming & shaming tool). These defaulters have received penalties for either having ‘deliberate errors in their tax returns’ or ‘deliberately failing to comply with their tax obligations’. Both natural persons and companies are affected i.e. sole traders, partnerships and corporates.

For over ten years now, the aim of publishing names and details like this has been to create an aggressive and additional deterrent for other potential defaulters who are not sensitive to the existing financial penalties HMRC are allowed to charge. HMRC’s naming & shaming / PDDD list damages the person’s reputation and potentially affects their third-party relationships with e.g. banks, customers/clients and suppliers.

HMRC’s Naming & Shaming / PDDD list includes details like:

  • the name and address of the person who was charged the tax penalty
  • the total amount of tax payable on which the penalty was based’
  • the total amount of penalties charged,
  • the dates concerned, and
  • the nature of the business/activity concerned

With the PDDD regime HMRC does not need to undertake a criminal investigation and successfully prosecute the individual or business entity concerned; it can publish their details as a matter of public record within civil interventions!

HMRC’s Naming & Shaming / PDDD publishes information where:

  • an investigation has been carried out and the taxpayer has been charged one or more penalties for ‘deliberate’ defaults, and
  • the civil penalties involved tax payable of more than £25,000.

Details are only published once the penalties are final i.e. they have been agreed as part of a contract settlement or where appeal proceedings have ended.

However, since 1 April 2017, HMRC’s naming & shaming tool has been used to publish details even more easily in the case of ‘offshore matters and transfers.’ In some of those cases the taxpayers need not have acted deliberately but simply have failed to declare – by September 2018 – their taxes concerning non-UK accounts, investment and assets for periods up to 2015/16. It follows that the PPDD trigger has been easier to pull.

Click here to see the current HMRC’s naming & shaming publication list. The PDDD law requires that HMRC does not publish details for more than 12 months from the date it was first made public. Older lists won’t be found on HMRC’s website nor captured for the National Archives; but will easily be found online where articles about the data have featured in articles and news stories.

Our analysis – HMRC’s naming & shaming tool – PDDD

We’ve spent time examining the latest PDDD list and recent ones available, those which were dated 31 March 2022, to the last one dated 24 November 2022 (five publications). The penalties concerned tax periods from 2011 to date. We believe the results are interesting, because there are obvious trends visible.

Nationally, there were 478 deliberate defaulters in the sample data, where the total connected tax liabilities were £81,074,795 plus the corresponding penalties of £49,505,513. These numbers are huge and so difficult not to take notice of!

This means that on average HMRC applied a 61% penalty, which from experience is certainly on the high side of all interventions While we don’t know if the taxpayer’s underlying actions were deliberate with an element of concealment, we do know that these figures completely excluded those where care was taken despite which innocent mistakes were made, and those where more care should have been taken.

  • Readers might be interested to know that more than a third of all PDDD deliberate defaulters were from the building/construction sector, with a total of 180 defaulters having to pay on average £120,956 tax and penalties.
  • – Food services sector came in as the second largest sector in the lists, but with a higher average of £138,972.71 tax and penalties; paid by 69 defaulters.
  • – At over 2.5 times the average tax including penalties, when compared to the building/construction sector, the Property services sector average was £314,941; paid by 39 defaulters.

 

We also turned our attention to London, being the capital and densely populated… in the London area, there were 79 defaulters whose details were published – that’s c.17% of the UK so not eye-catching in its itself. The total connected tax liabilities were £14,097,974 plus the corresponding penalties of £8,773,234. In total the London results made up c.18% of the national figures, so it would appear it is a representative location and perhaps indicative that PDDD regime is being applied fairly by HMRC across the country.

  • – 44 out of the 79, so over half of the PDDD defaulters were in the building/construction sector. The total tax liabilities and penalties were £5,962,379, which suggests an average of £135,508 for each defaulter.
  • – The next largest sector, in terms of the number of defaulters was the property services sector, but with only eight defaulters and total tax and penalty liabilities of £1,447,521. Interestingly, the London segment made up 8% of the total defaulters just as it did nationally, so again there seems to be no disparity in terms of geographic location where the underlying actions/behaviour of taxpayers was concerned. While the number of defaulters is significantly less than in the building/construction sector, the average liability was considerably higher at £ 180,940 each.
  • Yet defaulters in the next largest sector had an average tax and penalty liability of more than double the London average (£289,508), at £634,990. While small, there only being four taxpayers in the Finance/professional services sector, this was clearly different to the rest of the UK (with only seven outside and the average tax and penalties being approx. half of the London figure!).

There are many statistics and findings to be drawn out of the data, but with diminishing returns usually. Many sectors can be seen as expected, like agency workers, cleaners, company directors, IT persons, motor tradespeople, medical people and wholesalers.

From our experience, we were not surprised to see a disproportionate number of defaulters from the food service sector (cafes, restaurants and takeaways), but we were surprised to find fewer retailers. There was even one taxpayer from the adult entertainment industry.

See some of our other articles/posts at your leisure here or on our website:

 

How can we help? PDDD: HMRC’s naming & shaming tool

We believe it’s in a client’s best interests to discuss these types of cases with an ‘independent specialist’ even if there are no discrepancies to disclose. The right help at the right time ensures that HMRC are effectively managed and investigations are concluded expeditiously, and HMRC’s naming & shaming / PDDD limited.

At Pure Tax, our Tax Investigations specialists make it their mission to keep up-to-date with all the latest statistics and operational approaches being taken by HMRC, for the benefit of our clients. Even a routine HMRC self-assessment enquiry can pile on the pressure for entrepreneurs and businesses, so serious tax investigations dig deeper and often rattle clients. The latter are in-depth and intrusive to say the least. Our team fully understand this and work hard to provide peace of mind to our clients, acting as a trusted ‘buffer’ between them and HMRC.

Amit Puri leads our Tax Investigations & Disputes business; a fully trained and qualified former senior Inspector of Taxes with HMRC, and who regularly writes articles for leading publications regarding HMRC and the tax disputes world. After over a decade there, I left for the private sector in early 2015 to use my extensive tax investigations and disputes resolution experience; am definitely not a bookkeeper nor an accountant… our focus is on finding the light at the end of the tunnel.

Our team are experts at resolving contentious tax issues accurately and efficiently, and highly adept at managing our clients’ interactions with HMRC to ensure processes run smoothly and that our clients’ interests are best protected at all times.

We deliver that all-important and trusted ‘buffer’ between our client and HMRC during their in-depth and intrusive investigations, and in voluntary disclosures. This is something our clients, who have worked with us through these types of investigations, have truly appreciated.

Read some of their kind feedback here.

Please do get in touch to learn more about me and our Tax Investigations and Disputes team and how we have successfully guided clients through serious COP9 and COP8 investigations, business enquiries and tax disclosures.

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