THE VARYING USE of the term "tax avoidance" has caused confusion around the ongoing public debate.
In three reports prepared by the Oxford University Centre for Business Taxation at Saïd Business School, on behalf of the National Audit Office (NAO), the centre finds distinguishing characteristics different types of tax avoidance.
It also looked at the effectiveness of HMRC's tax avoidance disclosure regime (DOTAS), and how it all inter-relates to how HMRC defines the "tax gap" (the difference between tax collected and the tax that should be collected).
The reports are part of evidence gathering for the Public Accounts Committee's investigation into tackling marketed avoidance schemes.
The three categories of avoidance, all of which are legal, are:
On DOTAS, the centre found that, while the regime has some "limited evidence" of success, it also has its flaws.
The tax gap broadly relates to the previously described "effective avoidance", which are compliant with the law but against the will of parliament as far as HMRC is concerned. "It is deeply misleading to suggest that this represents non‐compliance or a failure to pay tax which is due," said the centre.
"The tax gap broadly relates to the previously described "effective avoidance", which are compliant with the law but against the will of parliament as far as HMRC is concerned. "It is deeply misleading to suggest that this represents non‐compliance or a failure to pay tax which is due," said the centre."
Everyone working in tax understands this, except politicians and HMRC. But then they have a drum to beat, and oh boy don't we hear them banging on!!
Posted by: Ubergeek, 07 Dec 2012 | 10:11
How long before it becomes "immoral" to have an ISA?
Posted by: CJM, 07 Dec 2012 | 11:22
"Taking advantage of legislation and the tax system: Using transactions that reduce tax due to opportunities offered through legislation, or relying on the structure of the international tax system. This can only be dealt with through "radical reform" of the system"
could be described as perfectly legitimate and acceptable 'Tax Planning'
whereas the 'Effective Avoidance' could be described as the tax a few (generally wealthy) are avoiding at the cost of higher taxes for the majority.
Posted by: richard berry, 07 Dec 2012 | 12:27
It is the complexity of the tax system that is creating this situation, and it is this way so each government can tweak the system to "buy" votes.
Make a flat rate tax which starts above a threshold. Have same rate for individuals and companies and tax at source. Then there is no difference between companies, employees, self employed etc etc.
Posted by: Mr Simple, 01 Jan 2013 | 19:36
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