Tax avoidance: Jimmy Carr’s financial advisor wasn’t wrongChances are you’ll have seen tax avoidance’splashed across”headlines, normally in conjunction with celebrity names?” Jimmy Carr and Wayne Rooney jump to mind due to their affiliation with tax scheme K2. Of course, Carr later?deemed the scheme a ?terrible error of judgement,” reporting on BBC’s Radio 4: ?My financial advisor asked, ?Do you want to pay less tax” It’s totally legal’. I went, ?yeah, fine, great’. Carr wasn’t completely in the wrong, but his financial advisor will have to be more careful going forward. The biggest difference between tax avoidance and tax evasion is that the former is legal. You?re bending the rules in your favour. On a small scale it could mean?putting your savings in an Individual?Savings Account (ISA) to avoid paying income tax or using a pension scheme. There’s nothing wrong with that. But there is a grey area which tax experts label “aggressive tax avoidance” the use of practices government would really no one use. If HMRC disagrees with your methods it can launch an investigation and force you to pay that tax back. Gary Barlow, who made use of Icebreaker, is a great example of this. The scheme was set up to buy IP rights, but HMRC doubted the operation and found that few rights were bought. Barlow had to cough up a lot of money. Companies that don’t pay tax UK.
Tax evasion: When you’re completely breaking the lawTax evasion is when you use straight up illegal practices to skimp paying taxes. This could be failing to file a tax return, not reporting your full income and hiding taxable assets?” fake offshore accounts fall into this category as well. It’s a criminal offence. Remember?that?eBay trader who was sent to prison for two years for not disclosing hisearnings HSBC was similarly in trouble for helping people hide cash in offshore accountsin 2007 and, a more recent case, is Credit Suisse. Dutch prosecutors had been tipped off to its “evasive manoeuvres”And have since launched a global investigation. These are all examples of breaking the law. Not only will tax evasion land you in prison, HMRC has the right to?”name and shame”?you if you’ve committed an offence greater than £25,000 that’s some bad publicity sure to burn your reputation. You will be chased and asked to pay what you oweAnd, in the case of money laundering, your possessions could be confiscated.
The difference between tax avoidance and tax evasionis a fine lineTax barrister David Quentin made a sound point when he argued: “The vision of tax avoidance as a dignified difference of opinion over legal interpretation is a radical romanticisation. Rather than bemoaning the failure to distinguish between avoidance and evasion, those who promulgate these scholastic taxonomies should come up with a compelling reason why there is one category of tax lie treated as fraud, and another category which does not even attract a civil penalty. This strange distinction has caused a lot of confusion in terms of, as Quentin suggested, what is to the letter of but not within the spirit of tax law. Either way, the government has unleashed the hounds and is making its rounds, taking on board the pledge prime minister Theresa May made during her leadership campaign: It doesn’t matter to me whether you’re Amazon, Google or Starbucks: you have a duty to put something back, you have a debt to fellow citizens and you have a responsibility to pay your taxes. Now’s the time to ensure you know what side of the law you’re on. By Shan” Schutte</a ></em ></p >
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