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The Chartered Institute of Taxation (CIOT) has issued a response to the 'naming and shaming' of tax defaulters as laid out in the Finance Bill 2009.

The CIOT has said that the idea of 'naming and shaming' deliberate tax defaulters (Budget Note 63) is in many ways hard to argue with as a route to helping improve attitudes towards tax compliance. It is a route that has been followed in other countries, notably Ireland.

John Whiting, Chairman of the CIOT's Management of Taxes Sub-Committee, said: "The proposition naturally raises concerns over ensuring that it is only used in appropriate circumstances."

These include the following:

• That it should be framed in terms of tax evaders who deliberately default and conceal.
• That there must be no risk of a genuine dispute with HMRC about the treatment of some tax matters leading to HMRC using this new power as a threat to settle.
• That the amounts involved of £25,000 are clearly small where defaults over a number of years accumulate – there needs to be a proper system of judgement that the offence really warrants such a sanction.
• That the taxpayer should be able to appeal to the Tax Tribunal against publication.

John Whiting added: "A question for HMRC is what controls will there be over ensuring that someone who is affected by an HMRC mistake does not get into this sanction? And if HMRC do make a ‘naming’ mistake, would proper compensation be paid?

"Making a full disclosure to HMRC can avoid this sanction, but the way that rule is hedged around in the Bill makes one wonder whether it is really as much of a safeguard as it should be."