01/09/2018 08:57 BST

UK Tax Avoiders Blocked From Receiving Honours By HM Revenue & Customs

'Poor tax behaviour is not consistent with the award.'

HM Revenue & Customs is blocking tax avoiders from receiving honours

Tax avoiders in the UK are reportedly being blocked from receiving honours by HM Revenue & Customs (HRMC).

The Times on Saturday reported that celebrities who use lawful but controversial schemes are being “blacklisted” by HMRC to protect the reputation of the honours list.

A Freedom of Information (FOI) request showed that the tax office used a traffic light system to assess the risk of nominees being exposed for their tax affairs. Green means low risk, amber is medium and red signals an individual is high risk. 

Once assessed, the nominees list is then sent back to the Cabinet Office honours committee and the prime minister via secure email.

An amber rating - given to individuals whose tax affairs would be “likely to cause adverse comment” - would damage their chance of receiving an honour, the Times said, adding that the system was a “rare exception to the principle of taxpayer confidentiality”.

Last year leaked emails appeared to reveal David Beckham’s frustration at missing out on a knighthood in 2013. 

The former footballer was one of a number of celebrities who invested in a tax avoidance scheme which was successfully challenged by HMRC.

It is not known if he was blocked from receiving an honour by the HMRC. 

The honours list, announced twice a year, consists of knights and dames, appointments to the Order of the British Empire and gallantry awards to servicemen and women, and civilians and is awarded on merit, for exceptional achievement or service. 

A document seen by the Times - which sets out the agreement between the Cabinet Office and HMRC - said that “poor tax behaviour is not consistent with the award of an honour”.

It continued: “Trust would likely be lost if an honour was awarded to someone with negative tax behaviours and those behaviours became linked to the positive recognition that accompanies the award of an honour.”

A government spokeswoman said: “Honours are given to reward outstanding service in a given field or area and each nomination is rigorously assessed.

“As a matter of longstanding policy, in order to protect the integrity of the system, government departments which may have an interest in a particular nomination - including HMRC - are invited to contribute their views during this process.”

This arrangement with HMRC was already highlighted on the website but the Times sought to clarify exactly what rules and guidance was in place to ensure potentially unsuitable candidates don’t receive honours.

In January, it asked: “What rules and/or guidance are there in the honours system regarding the awarding of honours to people with criminal convictions and/or other potential flaws in their character, such as cheating at sport, drug taking, offensive behaviour?”

The Cabinet Office refused to give the paper the information and argued releasing vetting agreements with HMRC and the police could hinder the system.

The Times appealed that decision and was later given the wording.