If the coalition really want 'savings', why do they ignore the £40bn a year in tax avoidance...?

Ahh, I thought I was being a bit narky

Bertie and LadyBlaBlah are being very impressively clever though

Good point Humphrey

There was a labour government for the last thirteen years, so what would their excuse be?

I don't know that credit agencies are used to snoop on benefit recipients, I have no knowledge of that, but the government does take action against tax avoiders and evaders - that is why there is a compliance department in HMRC. They collect tax through processing and also raise enquiries and interventions into evasion and avoidance.

There are entire offices set up to deal with new avoidance schemes that are entering the market all the time, although I believe there is less avoidance work generally at the moment as companies/taxpayers have less cash and are far more prone to losses due to the recession.

There are literally thousands of government workers who investigate taxpayers, companies, employers, to ensure that the correct tax is being paid. £435 billion was collected by HMRC in tax during 08/09. £400m of this was collected in underpayments - payments that wouldn't have been made apart from the intervention of HMRC. I'm afraid I can't find the figures that have been brought in my benefit investigation

In regard to benefits and tax credits, of course these are also pursued if they are claimed fraudulently. But the double whammy is that not only are people paying nothing into the system in tax when they are earning money and not telling HMRC so therefore their benefits do not decrease, they are also taking money from the pot that is meant to help those in need. So effectively they are taking twice.

I think both benefits and tax need to be looked at and of course any fraudulent activity of either should be dealt with. But I say again, I just don't see what else can be done.

I do seem to have gone on a bit. I won't blame you if you've nodded off

Because the people who are either avoiding or evading paying huge amounts of tax are the people who are more likely to vote Conservative?

I think that was what I said above? That to mitigate is to use all available reliefs, allowances etc.

I appreciate those aren't your words and I would agree with gifts to charities. But I wouldn't agree that investing in certain assets is necessarily always mitigating tax. Assets can be moved offshore for example to avoid a charge when sold and there is legislation to prevent this and to bring the charge back on shore. This legislation is avoidance legislation. However as I have said I do think that many people that would be considered "avoiders" would certainly argue that they are not going against the spirit of the law, or to use your words the intention of Parliament. They would say they are legally mitigating their tax bill.

But tbh I think we're straying away from your OP which is why isn't tax being collected correctly. Unless you consider that avoidance is still very much the issue not evasion? If so, and we ignore the mitigation element, can I ask how you think the problem can be remidied?

A distinction between mitigation and avoidance? I'm not sure really, I guess you could argue that you mitigate your tax bill by using all available reliefs, allowances etc, whereas avoidance would be a deliberate action to take a piece of legislation and bend it to your advantage and away from it's original purpose.

However I suspect those involved in avoidance would say they are mitigating their tax bill

The big distinction though is definately avoidance and evasion. I'm not sure what can be done, on top of what the government is already doing, to stop either one.

If attitudes were to change and it was seen as a bad thing to not contribute what is rightly due (which of course some of us do believe) then that may mean more tax would be declared correctly. Indeed for many large corporations, as well as honest singular taxpayers, they do want to be known as fair, honest companies and so would definately steer clear of any negative activity. And I think most people are inherently honest, regardless of whether we are discussing tax or benefits.

I do think some are inherently dishonest and some will try and see what they can get away with. Those are the ones that are targetted.

So what do you think could be done differently to decrease the amount of tax lost?

TSC you mention that someone was employed by her husband but didn't work for him to get tax breaks. I assume what you mean is that she was paid a wage without doing any work to use up her personal allowance? That would be tax evasion as it is a false situation created to minimise tax paid as a couple. But a family not working more hours is a decision made within the law by them to maximise the amount of money available to them. Which I think says more about givernment incentives than a family trying to get by.

TAX - the difference is that the single mum is responding to perverse incentives - she is doing things that are not in her long-term interest due to errors in the way the benefit system is formulated. We don't want to discourage work and stable relationships which is what we are doing.

If the government could catch those who evade their tax they would. I don't think it is that easy.

The weathly pay a greater amount of tax though, their income is taxed at a higher rate.

I think BertieBassest has said it all eloquently

even if you practice tax avoidance you are going to be a contributer to the state by the tax you do pay

disclaimer, I have no problem with single mothers working to exactly within the rules at all. It is just that it is a different thing entirely

But that kind of tax avoidance is government sanctioned. They are only doing what lawmakers want them to do.

I would much rather give as little as possible to the tax man, and then top up my giving via charities (particularly the church).

I wonder how many of those who whinge about people not paying tax actually give any significant (eg 5 - 10% of their income) to charity.

I once mentioned at a rather heated discussion (me economically right wing and others left wing) that of course everyone around the table paid as much tax as they could, not practising any of the legitimate ways of reducing one's tax bill. It was the end of that conversation. I was amused by this.

Tax evasion is a different thing.

Are tax avoiders doing anything illegal, or are they merely exploiting loopholes?

Loopholes are deliberately put into the taxation system to encourage certain actions or discourage others. They are a way for individuals and corporations to fall in line with the whims of the government policy of the day.

In other times (and other governments), these loopholes need to be closed, and therefore go through a legislative process to make them happen.

It is the duty of both individuals and corporations to pay as little tax as they can legally get away with. You can't blame them when they take the government's bait.

Oh and there is no minimum amount when it comes to tax enquiries and repayments

Do you mean tax evasion?

Tax avoidance is quite legal, although you could argue morally wrong as it usually does not take the spirit of laws it avoids - it often involves loop holes which then have to closed.

And do you mean structured tax evasion, such as people signing up for schemes from accountants to save them money, or more general evasion such as a self employed person not declaring all their income?

The amount collected where evasion has been detected goes up year on year. Avoidance is also being tackled constantly by specialised teams who determine whether these loop holes do exist.

I'm not sure what you want to be done? If it is collect more money from evasion, then you are only ever going to be able to collect a proportion of the evaders at any one time. It is a continual battle to find this money and get it in.

You could try educating evaders and avoiders alike to stay within the actualities and the spirit of the tax legislation in this country but I feel this would largely fall on deaf ears because apart from genuine errors people generally have taken this path quite intentionally.

Of course I should also point out that some avoidance does work, and there are also reliefs and allowances in place that should always be utilised when due.

Are you a little confused in your terminology?

"Tax avoidance is the legal utilisation of the tax regime to one's own advantage, to reduce the amount of tax that is payable by means that are within the law. By contrast, tax evasion is the general term for efforts to not pay taxes by illegal means."