Avoidance isn’t illegal…is it?

The annual ICAEW Hardman Memeorial Lecture is always good value – last year Dave Hartnett kept calling advisers “alchemists” – experts at turning income into capital – and another David didn’t disappoint this year.

The Exchequer secretary to the Treasury, David Gauke, said he knew advisers often got frustrated with people conflating legitimate tax planning, avoidance and evasion.

However, Gauke then went on to say the government was looking to clamp down on avoidance through the project to modify the tax reliefs system.

Brace yourself for more frustration from advisers then Mr Gauke.

The profession has been banging on forever that “avoidance” isn’t illegal.

He did qualify his statement by saying it’s the instances where reliefs and exemptions are then used in a “highly artificial way,” those are the ones that the government is looking to foil.

“In these instances, people use their resources – and their talents – to twist the law and create results that everyone knows are simply too good to be true,” Gauke said.

But it’s the grey area between skilled advisers making the most of the tax system to arrange clients’ finances efficiently, and anyone deliberately trying to cheat the system, that the term “avoidance” still appears not to adequately distinguish between.

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