According to HMRC’s published List of Deliberate Tax Defaulters, 200 of these 775 businesses were restaurants or takeaways.
The government have been publishing this list since December 2017 and have also used a specific taskforce to target the hospitality industry.
Why do restaurants and takeaways make up a quarter of all deliberate tax defaulters?
There are four main reasons why this sector have generated so many businesses that have evaded tax.
- Employees paid cash-in-hand: involves avoiding employees NICs and PAYE and understatement of takings
- Austerity times pressure on profits: gives motivation to avoid paying VAT (and keep the other tax bills as low as possible)
- Electronic payment card system: one particular system can be used without leaving an audit trail, avoiding evidence of those takings
- Unreported tips: tips either not being fully reported, or a faulty system of recording is in place
What is a deliberate tax defaulter?
HMRC has a very specific definition of a deliberate tax defaulter and rules about when their details are published on their public list.
According to HMRC, deliberate tax defaulters are “people who have received penalties either for:
- deliberate errors in their tax returns
- deliberately failing to comply with their tax obligations”
Can HMRC publish the details of everyone that gets a fine?
Section 94 of the Finance Act (2009) determines HMRC’s right to publish information on deliberate defaulters. They can only publish the details of people that have been investigated and charged penalties for deliberate defaults that amount to more than £25,000.
Information that is published on the deliberate defaulters list:
- Name
- Occupation, Trade or Business type
- Address
- Period of default
- Total amount of tax/duty that the penalties are based on (total tax evaded)
- Penalties given
- Other information, such as alternative trading name or previous trading name
All of this information is freely available online for anyone to read as soon as the total of your penalties has been finalised. It will be available for 12 months from the initial publication date. These lists do not become part of the National Archives.
Is there any way to stop details being made public?
If you fully co-operate with HMRC during an investigation, completely “disclosing details of the defaults” and you “earn the maximum reduction of the penalties”, then your information will remain private.