Yesterday HMRC published a list of 9 small businesses which have been charged penalties for not declaring all of their income to the tax man. The idea of this “naming and shaming” is that it will deter other business people from trying to avoid paying their tax. Indeed it may scare some into paying more tax than they should, presumably HMRC would regard this as a good thing.
The list includes a hairdresser from Liverpool who was charged over £17,000 for failing to declare income on which the tax due was £30,000. I don’t know, but this income could have been earned over a 6 year period and so we could be talking about a hairdresser who pocketed around £300 per week. Did he really have this money or was it just that his records were poor and he couldn’t prove that he hadn’t?
At the end of the day perhaps he does owe the tax, perhaps the penalty is fair, but it hardly seems fair that his name (I’ll not mention it here but it is freely available from all sorts of websites from HMRC to the Daily Mail) is published for all to see.
How do HMRC decide who to name? Why are 5 of the 9 businesses named from the North West of England? Is this where all of the tax dodgers are? I don’t think so! Not one London business has been mentioned, in fact there is only 1 business that is inside the M25 and even then it’s only inside by less than a mile!
The tax owed by all 9 of these businesses amounted to under £1m. Yet we all know that Starbucks had UK earnings last year of £400m and paid no tax; Amazon had sales of £3.4bn in 2011 and paid £1.8m and Google had income of £395m and paid £6m in tax. These are the well known companies we know about, there must be hundreds of multi-national companies avoiding UK tax, apparently legitimately and there’s nothing HMRC seem to be able to do about it.
It seems, if you are a hairdresser, a plumber or taxi driver you had better watch out, HMRC are after you. However if you are a big business HMRC will leave you alone. Could it be that it’s easier to go for the small guys but to go for big multi-nationals with expensive accountants and lawyers well, that would be hard wouldn’t it. Better go for the soft targets!
As Aesop said “We hang the petty thieves and appoint the great ones to public office”
Image sourced from Images of Money