Article: Tax avoidance or tax evasion? - Morris Cook Chartered Accountants, Oswestry
30th April 2012
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Usually commentary on the Budget falls away after two weeks but this year tax has remained a current topic.

Tax avoidance and tax evasion are spoken about in the same breath implying that they are both equal evils. Tax evasion is illegal and tax avoidance is legal - it is as simple as that.

There is now a new angle, when in the Budget, aggressive tax avoidance was to be singled out as an evil. Perhaps it is a part of softening up public opinion to make it ready to accept a general anti abuse rule (GAAR)?

This is all well and good if there are well patrolled limits to which the taxing authority is restricted. The businesses usually require some basic requirements from the tax system. Is the law clear, is it fair, is everyone treated the equally without fear or favour, is it confidential, is it certain and hopefully is it consistent?

A tax partner at PwC has said that the GAAR is intended for aggressive tax planning but those who promote aggressive tax planning will only see it as another bit of legislation to avoid. As an old Tax Inspector once told me “You can have a fair tax system or you can have a simple tax system but you can’t have both”

Is it considered wrong for someone to put a lump sum into their pension pot if they have had a good year? Is it acceptable for a businessman to buy some new machinery before the year end? Both scenarios will result in less tax, both are tax avoidance because tax will be lessened by those actions.

What seems "acceptable" to one may seem "aggressive" to another and who is going to judge that and will it apply equally to all citizens?



To find our more, contact Morris Cook Chartered Accountants

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John W

Member since: 10th July 2012

A quick introduction - I'm John Waine, Director of TheBestOfOswestry. Having lived in this beautiful area for around 20 years now, I have decided to stay. :)

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