The number of individuals publicly ‘named and shamed’ for tax defaults in the UK has increased to 558, up from 543 in the previous year, according to data provided by HMRC to chartered accountants and business advisers Lubbock Fine.
HMRC’s tax defaulters list aims to discourage tax evasion and avoidance by exposing individuals who fail to meet their obligations. Public disclosure can inflict significant reputational harm, affecting both personal and professional lives. For instance, individuals listed may face scrutiny from regulators or be excluded from bidding on public sector contracts.
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The list includes people who owe £25,000 or more in unpaid taxes for a period of 12 months or longer. Details published by HMRC include offenders’ names, addresses, the amount of tax owed, and penalties incurred.
High-profile individuals listed by HMRC who have fallen foul of HMRC in recent years are former England and Liverpool footballer Emile Heskey and Kristo Käärmann, CEO of the financial technology firm Wise, Lubbock Fine found using data gathered from a freedom of information (FOI) request to the tax office.
Heskey was reportedly ordered to pay legal costs totalling £194,795 by specialist costs judge Mark Whalan at a High Court hearing in July after a lengthy legal case over an unpaid tax bill of £1.64 million which started in 2017.
Käärmann was included on the name and shame list after failing to declare a $10 million share sale in September 2017.
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HMRC fined him £366,000 after he failed to open two letters telling him about a £720,495 tax liability, blaming his travel schedule.
The reputational risks of being ‘named and shamed by HMRC
In today’s climate, where public finances are under strain, high earners are increasingly vulnerable to media scrutiny and public backlash when it comes to tax matters. Even those who take lawful steps to mitigate their tax liabilities may find themselves branded as ‘tax dodgers,’ resulting in significant reputational harm. As a result, it’s crucial for individuals and businesses to consider the potential damage to their reputation alongside their tax strategy, says Hanna Basha, partner Payne Hicks Beach and Spear’s Recommended Privacy and Reputation lawyer.
As HMRC ramps up its enforcement efforts, the rise in publicly named tax defaulters underscores the serious consequences of non-compliance. For individuals and businesses alike, ensuring timely tax payments and addressing any discrepancies early can help avoid inclusion on the damaging list.
‘Being labelled as a deliberate tax avoider is likely to cause damage to the reputation and brands of individuals and businesses. It is likely to cause others to re-consider their association as they will not want their own reputations and brands to be tarnished,’ she says.
Tim Maltin, Spear’s Top Flight Reputation Manager and managing partner of specialist international reputation management agency for high-net-worth individuals Maltin PR, said the naming and shaming by HMRC of individuals they see as tax avoiders was a ‘worrying trend’.
‘We believe that people are innocent until proven guilty, and should not have their names tarnished in the press before the proper conclusions have been drawn by the courts.
‘Clients subsequently found to be innocent face an uphill battle to clear their hitherto good names in the press, as the publicity around the initial finger-pointing can sometimes outweigh the not guilty verdict in court, which may come several months or even years later.
Phil Blackburn, business tax partner at Lubbock Fine, said there was an increased reliance on the ‘name and shame’ approach by HMRC.
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‘HMRC sees its public “list of shame” as a powerful tool – so they’re using it more and more,’ Blackburn said.
He added that the government has set ambitious tax collection targets for HMRC, likely driving the growing use of such measures. ‘Being publicly named and shamed can do enormous reputational damage to individuals and businesses,’ Blackburn said.
Blackburn also highlighted the importance of proactive action for those who have underpaid taxes. ‘Naming and shaming is another good reason why you should make an early disclosure to HMRC if you have underpaid tax. HMRC gives you credit if you try to fix the mistakes you’ve made,’ he said.
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Is reputational damage a deterrent?
One of the primary objectives of the PDDD (Publishing Details of Deliberate Defaulters) programme is to act as a deterrent, encouraging individuals to comply with their tax obligations, Basha says.
The very ethos of the PDDD programme is to act as a deterrent although various research papers conclude that the deterrent is not as significant as HMRC may want it to be, she explains. ‘However, the fear of the threat of publication of negative information can change behaviour. The emotional response to being ‘shamed’ either justifiably or unjustifiably can be strong and reactions difficult to predict.’
How to minimise reputation damage
Basha says that for those who find themselves under scrutiny for tax irregularities, addressing the situation with honesty and transparency is crucial.
‘Give a full and honest explanation and apologise if necessary. Seeking to justify non-payment will make matters worse, but a thoughtful and truthful explanation may well assist to repair some of the damage caused.’
