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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

can someone explain to me the difference between benefit fraud and tax avoidence?

71 replies

OracleInaCoracle · 08/10/2010 15:28

because as far as i can tell, the only difference is that you pay an accountant to help you avoid tax, therefore making it legal. but isnt it also immoral? and certainly no more moral than benefit fraud?

i have to post and run as i have a docs appt, but this is a genuine question, and it'd be nice to have a real discussion on this.

OP posts:
OldLadyKnowsNothing · 08/10/2010 15:29

Benefit fraud is illegal, tax evasion is illegal. Tax avoidance is ordering your affairs so as to pay the least amount of tax possible, and is legal. What's moral about paying more than you're expected to?

PosieParker · 08/10/2010 15:30

One is for the poor and one for the rich.

muggglewump · 08/10/2010 15:30

One is illegal, one isn't.

lal123 · 08/10/2010 15:31

agree with OldLady - wish I earned enough to avoid tax. Why should anyone be expected to pay more than they legally have to? If too much tax was taken off you would you say it was immoral to ask for it back?

Original poster
OracleInaCoracle · 08/10/2010 15:32

but isnt it finding loopholes in the system? my dad worked from home and his accoutant put his new fridge freezer on his business account as a business expense. is that legal? and is it right?!

OP posts:
purits · 08/10/2010 15:32

THESE THREADS ARE GETTING TEDIOUS!

One is illegal, the other isn't. Simple.

Original poster
OracleInaCoracle · 08/10/2010 15:33

ok purits, so dont post.

simple.

OP posts:
pagwatch · 08/10/2010 15:35

Tax evasion is illegal
tax avoidance is legal
benefit fraud is fraud
claiming child benefit when you are are well off and don't need it is also legal

TBH morally I find tax avoidance dreadful and wouldn't pay an accountantto find us loop holes.

But equally I know when I said that I don't claim child benefit I got sneered at for being goody two shoes and also told I was doingthe wrongthing as I should claim it and give it to someone.

I suspect many of the people protesting about tax avoidance would quietly go to an accountant if the were left an inheritance or won the lottery. I would be really interested to se how many actually sayto the accountant given them - 'no no, I really want to pay that' but we don't find justification for it until we are in that position IYSWIM.

But I am not sure what is to be achieved by tryingto draw a line between all these issues. surely you will answer accordingto your own moral compass and many ofthose who will be outraged about tax avoidance will be the ones who also can think of really good reasons why they should claim CB.
IYSWIM

I wish to god they would close some ofthe bloody tax loop holes though. Pisses me off

purits · 08/10/2010 15:35

So don't start repetitive threads. This has been done to death over the past few days

ivykaty44 · 08/10/2010 15:36

evasion = trickery, cunning, or deception
fraud = trickery, cunning, and deception

nocake · 08/10/2010 15:37

If the fridge freezer was a genuine business expense then there would be no problem with setting it off against tax. If it wasn't then your Dad is guilty of tax evasion (which is illegal), not tax avoidence. He wasn't exploiting a loophole. He was breaking the law.

nickelbabe · 08/10/2010 15:38

"my dad worked from home and his accoutant put his new fridge freezer on his business account as a business expense. is that legal? and is it right?"

it depends on why he's using the fridge.
if he has to keep products cold/frozen, or if he has members of staff who use the firdge, then yes, it's fine.
it's also fine if he uses it for keeping stuff cool to entertain clients.

It's not okay if it's fridge/freezer that he'll be using for his own meals and for personal use.

hf128219 · 08/10/2010 15:38

There are some that make some forms of Tax Avoidance be viewed as 'unacceptable tax planning'.

In 2004 statutory provisions came into effect requiring arrangements that enable a person to obtain a tax advantage to be disclosed to HMRC.

purits · 08/10/2010 15:39

pag, as we have seen over the CB issue, life isn't simple. There is always some group shouting 'what about me?'. So rules have to be tinkered with to adjust for circumstances, and that's what opens up the chinks in the armour for avoiders to take advantage of. So an amending rule is brought in, which opens up more chinks and so it goes.
The more you try to make it right, the more avoiding opportunities you open up.

pagwatch · 08/10/2010 15:40

yes. I know a bit about tax law. I am still allowed to wish it is possible though, I think....

purits · 08/10/2010 15:44

"I am still allowed to wish it is possible though, I think...."

Smile Have you seen the Google homepage today? (John Lennon's birthday)

Imagine all the people living life in peace.
You may say I'm a dreamer, but I'm not the only one.
I hope someday you'll join us, and the world will be as one.

MIFLAW · 08/10/2010 15:45

OP

Do YOU not practise tax avoidance then? As in, do you volunteer to pay more tax on your earnings than the taxman actually asks you for?

An ISA is tax avoidance, FFS. Is THAT evil and immoral too?

Appletrees · 08/10/2010 15:49

Benefit fraud would be equivalent to tax evasion. They're both illegal.

Tax avoidance would be equivalent to, I don't know, having another child in order to get a bigger council house. Of course this never ever happens it's just an example. But both of these are legal.

Litchick · 08/10/2010 15:50

Honest to God, tax avoidance is what we all do when we take up our personal allowance. Or put money in an ISA.

These are 'loopholes' ie perfectly legal ways not to pay tax.

Last week I bought a new car. I did it to avoid paying the increased VAT that will bite next January.
What on earth is immoral about that?

pagwatch · 08/10/2010 15:53

Oooh I am chanelling lennon not Lenin... less social equality but better tunes

SanctiMoanyArse · 08/10/2010 15:56

Tax evasion and benefit fraud are directly equal

It's all wrong

Deliberately hiring yourself a lawyer to find get outs is immoral

There's your answer

(from someone starting to wonder just why the hell she chose not to claim the council tax benefit she ahs been entitled to for the past year when it seems everyone else is hiring in staff to find their 50ps for them)

hf128219 · 08/10/2010 15:58

I don't think we're talking about ISA's or buying goods before January 2011 - more like contrived Gilt Strip losses counterbalanced by gains on exempt assets such as options.

Appletrees · 08/10/2010 15:58

Oh I'm a tax avoider. I'm fitting a kitchen now to avoid post Christmas VAT increase.

nickelbabe · 08/10/2010 15:59

I think the main problem is the difference between the terms tax evasion and tax avoidance is being missed.

tax evasion is when you deliberately try not to pay tax that you should (by falsifying earnings, or not declaring income)
tax avoidance is not paying tax you don't have to pay. pay what's due and no more.

benefit fraud is therefore equatible to tax evasion and is illegal.

MIFLAW · 08/10/2010 16:00

Right - so other perfectly legal ways of protecting yourself from tax then? Thanks, that makes it all clear.

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