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Are Fines, Penalties and Name and Shaming actually making a difference?

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Posted by: Tony Margaritelli | Last modified on 24/06/2019

Talk to HMRC and they firmly believe that raising fines is the only way to change attitudes. Always preceding any outpouring from HMRC about fines and penalties is their favourite expression of choice “a small minority of taxpayers.” It’s because of them and their attitude to paying the tax that is due that HMRC seem to have no other option other than to issue fines like confetti at a wedding showering the unfortunate taxpayer with layer upon layer of fines.

Their ultimate sanction, they believe, is the formal naming and shaming whereby errant taxpayers and companies are named and the amounts they failed to pay are duly listed.

Simple statements are made about how much XYX failed to pay and over how many years plus the amounts of the fines raised. Interestingly no details are actually provided of how much of this money was actually recouped and over what period so, the inference one can only draw is that very little was actually recovered because if it were then for sure HMRC would want us to know, wouldn’t they?

Every three months the list is produced and there is seemingly no reduction in miscreants and failures so are we right to question HMRC’s attitude in this and the effectiveness of the whole fine and penalty culture?

The fine and penalty culture does give HMRC a welter of publicity grabbing opportunity to announce they have caught bad taxpayers and the announce of just how much this person or company had failed to pay over. They seldom say that such amounts are not necessarily accurate and equally seldom say how much of the estimated amounts have been or will actually be recovered but the joy of the writer is usually unbounded, and every case is heralded as a victory of sorts.

What we have no information on however is the exact opposite circumstances, we have no information of how much taxpayers have wasted and lost by HMRC’s inefficiencies and how much they have lost in fines and penalties if they were applied in equal measure HMRC for the same sort of failures.

We have a Revenue service that tries to identify all manner of failures that will warrant financial punishment and even if they accept that a failure was not deliberate still, they are able to calculate a financial redress except in one single and obvious instance.

The only time any failure is deemed acceptable and cleared by the issue of an apology with no other redress is of course when the failure is by HMRC and no names, no amounts, no pictures and virtually no publicity is given in these circumstances.

Seriously, is this fine culture actually achieving anything? And if it is so effective then surely this is the proven way to make for a better more effective HMRC.