December is the start of the busiest period for every tax accountant in the UK, as they endeavour to help as many people as they can who have left their self-assessments or tax returns to the last minute get them filed and paid in time.
The reason for this is that people want to avoid the potential penalties for late submissions, late payments, or commonly both because if someone files late they are invariably going to pay late as well, which has to potential to spiral into next year’s accounts in particularly bad circumstances.
However, a term that is often discussed at the end of the year as well is the deliberate defaulter, to the point that they are named and shamed in a list known to Her Majesty’s Revenue and Customs as the list of deliberate tax defaulters.
Whilst some may know about the list, fewer are aware of the term “deliberate defaulter”, the criteria for ending up on the list and where the name came from to begin with. All of which will be explained in this brief guide.
What Does It Mean?
The HMRC “name and shame” policy is often characterised in the media and on Gov UK as a list of tax evaders or tax cheats, but that is technically not the case, although arguably this is more a matter of semantics than anything else.
A deliberate defaulter or deliberate tax defaulter is someone who has received a penalty for a deliberate act of tax evasion, either by making deliberate errors or by deliberately refusing to file or pay.
If these penalties relate to tax bills of more than £25,000, then HMRC may choose to publish identifying information about them and details about the penalty in question. This information is published for twelve months before being removed as required by law.
HMRC do not have to publish these names and may choose not to do so if they comply early with HMRC and disclose why the mistakes were made.
They will not disclose this information if the mistake was made out of carelessness or a wrongful filing made in good faith.
Where Does The Term Come From?
The name and shame policy first came into force in 2013, but the term had been used in UK law as early as 2010, albeit in a different context.
The 2010 case De Beers UK v Atos Origin IT Services UK referred to a deliberate default in the context of a deliberate breach of contract that was knowingly committed.
It should be said that deliberate defaults are not the same as strategic defaults, the concept of deliberately not paying certain debts such as mortgage payments despite being able to do so, typically in cases when a house is completely underwater after a housing bubble.
However, outside of the tax world, the two concepts are remarkably similar, committing what is ostensibly a legal action in such bad faith as to make it illegal.