Tax Avoidance or Tax Evasion?


You may have heard in the media recently this topic being discussed.  You may not think that if affects you, but it affects us all.

What is avoidance? Avoidance is legal.

What is evasion? Evasion is illegal.

There is a fine line between avoidance and evasion, and there can be a tipping point when avoidance does become evasion.

An honest and professional accountant/tax expert will always look to save the client tax whenever possible, using the tax laws and legislation available to them, working within the governments guidelines.  Tax planning is a must.

How does this differ from accountant to accountant?

Every qualified accountant will study tax laws, to a certain level, along with relevant experience gained in order to go into private practice, governed by their professional body.  If they wish to broaden their knowledge and specialise in certain areas applicable to tax laws, which can be very complicated, they will train specifically for that area.

Remember to always look a gift horse in the mouth, when promises of tax savings are offered, ensure they are realistic, applicable to your circumstances, understood correctly and your agent is acting honestly. 

The results of a lengthy tax investigation will remain with the tax payer, and if found to be evading tax the individual/company will be held on record at HMRC as a ‘bad taxpayer’ resulting (a few examples below) in:-

  • HMRC withholding future tax repayments
  • More enquiries
  • Administration costs of investigation forced onto the tax payer by HMRC
  • HMRC will have the right to withhold any future loss carry backs or tax credits under investigation and disallow when calculating penalties.

Your qualified agent will be aware how to use the laws applicable and correctly.

Evasion is a conscious act of omission or commission. It involves a criminal offence e.g.

  • False accounting entries
  • Deferring sales
  • Omitting sales
  • An attempt to deceive.

There is much to HMRC’s legislation and it is advisable to seek the advice of a qualified appropriate accountant.

Please contact:  Dawn Johnson FMAAT

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