Tax Evasion and Tax Avoidance

The difference between tax evasion and tax avoidance is that tax evasion is illegal and tax avoidance is not. Or as somebody once put it, the difference is the thickness of a prison wall!

Nowadays things are quite so clear, as their appears to be a trend from the government to confuse the two for political purposes, often the suggestion has been made that they are introducing a variety of changes to the law in order to discourage criminal activity. When in fact, they are attempting to link tax avoidance with tax evasion

The reason often cited is the tax gap that is the difference between the taxes the government should collect and what they actually do collect. In September 2010, HMRC stated that this had risen to £42bn. However the bulk of the taxes not collected arose from VAT and faulty self assessment form completion. The amount lost through illegal evasion of tax is believed to be quite small.

So our view is that government should focus more on improving the administration and systems within HMRC, rather than criminalise tax avoidance. As has been stated in case law – it is the right of every Englishman to arrange his financial affairs in such a way as to minimise the impact of taxation.

What are your views?

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