Tax Evasion

AlecR said:
Well no as evasion implies that tax isn't being paid at all.

Avoidance implies that you're avoiding paying all of your tax but you're still paying some tax.
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No it doesn't. Even Al Capone paid some tax. The difference between evasion and avoidance is whether or not you can prosecuted for it with enough chance of a conviction for the authorities to take you to court. A skilled accountant can make the difference between the two. Even just hiding the evidence well enough takes it from evasion to avoidance.

The words have pretty much the same meaning. For example, I just did a search for "evade". Just the word, nothing else:

https://duckduckgo.com/?q=evade&ia=meanings

The second hit was a thesaurus:

http://www.thesaurus.com/browse/evade

And, unsurprisingly, "avoid" is listed as a synonym for "evade".
 
No it doesn't. Even Al Capone paid some tax. The difference between evasion and avoidance is whether or not you can prosecuted for it with enough chance of a conviction for the authorities to take you to court. A skilled accountant can make the difference between the two. Even just hiding the evidence well enough takes it from evasion to avoidance.
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Err, no. If your evading tax by disguising it as avoidance, it still isn't legal, just HMRC might not be able to get sufficient evidence to convict you. Hiding a body doesn't mean you aren't a murderer!

And, unsurprisingly, "avoid" is listed as a synonym for "evade".
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Yeah but the legal definition is different.
 
See this is an issue with big corp turned over 2000 million squillian but only paid £100k tax.

yep but maybe the bosses took all of it as a salary so they paid an enormous amount of income tax. Leaving hardly any profit in the company anyway.


I don't think I've read an article that has stated X.corp made xxxxxxxxx amount profit but only paid xx corporation tax. Because that wouldn't be possible.

What grabs headlines is turnover.

company A could make £200k profit on £300k turnover
Company B could make £125k profit on £44million turnover

Doesn't mean they are fiddling the system

Its the Celebs using dodgy schemes. But even that won't make a dent in the overall position
 
AlecR said:
Title is completely wrong. Evasion is illegal, avoidance isn't.

Companies, people you hear about avoid tax, they don't evade it. It's perfectly legal to do, so why wouldn't they do it?

Blame the Government, not the companies (I guess people are slightly more blameable).
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If I a put a wig and make-up on, a nice dress, stuck some melons down my top and managed to get into a women's swimming class would that be my fault or the swimming pool's for daring to even offer female only classes?

There are very few 'loop holes' in the tax laws, but there are numerous concessions and for good reason. That doesn't mean companies are then not acting immorally if they change their set-up to meet the criteria for the reduction.

This is what most of the publicised tax avoidance schemes involve.

A tax based on profits is sensible, after all it would be unfair to charge a struggling firm in the red a tax but this also means large companies can 'massage' their profit lines to reduce the amount they pay.

So blame "the government" all you want but the principle behind a tax on profits is sensible. The alternatives are putting failing businesses out of action more quickly or at best making a very complex law that covers every possible action a successful business and stops them avoiding it.


AlecR said:
But you have to bare in mind that these companies will leave if we change the system and then a lot more money will be lost.
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No they won't. We already have one of the most competitive tax regimes in the Western World when it comes to business taxes and yet many still go through all sorts of hoops to avoid paying it.

It's also the dilemma offered by a wife beater. Leave me and no other man would have you blah blah blah.

AlecR said:
Also they only avoid corporation tax, what about all the VAT they generate, people they employ all pay taxes, etc.
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That makes it alright then. Next time I go shopping I'll ask for the VAT to be knocked off seeing as I already pay a lot in income tax and NI.
 
I can't really begrudge anyway avoiding paying tax because if I was able to I'd do exactly the same thing.

The morals of avoiding tax though is a very tricky one, do we apply it to everyone or should MP's be squeaky clean to set an example to the rest or do we label everyone as immoral and hound them until they pay?
 
People seem to miss that a lot of avoidance has come about because the govt wants to incentivise some behaviour or other... from allowing people to save for retirement, or invest a certain amount in an ISA through to letting farms be passed on without having to sell assets to meet IHT obligations or encouraging investment in the British film industry or encouraging people to invest in small quoted companies on AIM or encouraging entrepreneurs setting up ltd companies with entrepeneur relief etc....

People seem to have some idea that avoidance is something involving fiendish accountants and fancy schemes and basically evasion by another name... some of it can be but schemes sailing too close to the wind get challenged, ruled unlawful and tax has to be paid... see Jimmy Carr etc... Plenty of avoidance is simply doing things that the govt has allowed/set up specifically to avoid/minimise tax - nothing underhand per say, doesn't require fiendish schemes but simply following the rules which explicitly allow you to avoid or reduce your tax liability by doing X.
 
AlecR said:
Title is completely wrong. Evasion is illegal, avoidance isn't.

Companies, people you hear about avoid tax, they don't evade it. It's perfectly legal to do, so why wouldn't they do it?

Blame the Government, not the companies (I guess people are slightly more blameable). But you have to bare in mind that these companies will leave if we change the system and then a lot more money will be lost.

Also they only avoid corporation tax, what about all the VAT they generate, people they employ all pay taxes, etc.
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Avoid... Evasion. Whats the difference?
 
History of tax resistance is a very long history and interesting. We are pretty much taxed more at this point in time as far as i am aware than has ever been taxed in history. Even if you take inflation and standard of living in to account or a ratio of tax to income calculation. Although it does get difficult to make the comparison the further you go back. The government is larger now than it has ever been even as a ratio to the rest of the economy, as far as i am aware.

http://en.wikipedia.org/wiki/History_of_tax_resistance
 
DAIR said:
Avoid... Evasion. Whats the difference?
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Evading tax is basically not paying it when you should be paying it, usually by hiding or not declaring assets/income. It is illegal.

Avoiding tax is using legal means to reduce or avoid tax, it is legal else it would be evasion... the govt allows various means for you to avoid tax.
 
DAIR said:
Would make things much more clear cut. Have to wonder why this isn't already being done..
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Its extremely harsh on those on low incomes, hence the personal allowance.

I.e.

Under the current system earn £10,000 you pay £245.28 and are left with £9754.72

Under your proposed system earn £10,000, you pay £2000 and you are left with £8,000

At around £20k it makes little difference, but below hits hard and above that does not at all.


The government wants people to start their own business, hence entrepreneur relief.

The government wants to stimulate creative arts, hence relief for video games industry, film industry etc.

Companies pay huge amounts of tax on things like NI and VAT irrespective of the tax on their bottom line. Most tax raised in this country is raised from the people rather than companies.

The vast majority of tax avoidance schemes are approved by the HMRC in laws written by government. You have to tell HMRC which scheme you are using and they have to approve it. Ones that are not approved have to pay simple as that.

You say big companies are bad, small companies/self employed people are just as bad. I'm yet to find a trades person that does not accept cash for discount. Does not put through personal purchases and mileage through the company to reduce the tax to pay etc. Its just the way things are and there is no point is getting wound up over it.

In the grand scheme of things most individuals and companies that avoid tax paying lots of tax actually contribute more a year than I do in a life time. Should I be mad at that thought? Probably not.
 
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How about having a fairer taxation system?
Maybe that way there would be no reason to evade / avoid tax.

Have a simple personal allowance and a single flat rate of tax.
How do you justify having an increasing % as you start to earn more? This is precisely what high-earners dislike.
 
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