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

[OracleInaCoracle]

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.

Incidentally, on the subject of benefits one is not entitled to, I wonder how many people on this and similar threads have taken child benefit without really "needing" it? Or who know rich pensioners who have taken the winter fuel allowance? Is that "unethical" too?

how about childcare vouchers, another popular piece of tax avoidance exploited by people who don't necessarily "need" the saving?

Child Trust Fund, anyone? Anyone take that when they had no need of a £250 ISA for their child?

But of course, that's "different".

PMSL that I am to be feared- that's a lugh!

I miught have high standards for myselff but you''ll rarely find me condemning someone on Mn (or elsewhree) directly: you might find me getting confused typing myself up in knots to avoid it though.

This is a theoretical debate, no? No actual peoples involved?

People have back stories and needs and all sorts of complications. Ethics though is just that- plain old and boring.

To equate behaviours around benefits and tax:

Tax Avoidance = Claiming all the benefits you are entitled to.

Tax evasion = Claiming benefits you are not entitled to.

MIFL:AW I hope that last one wasn't to me- becuase qualifying for council tax benefit would suggest that I did need anything I did claim.

but maybe unethical should be replaced by- what? questionable?

I woudl certainly say claiming CB if you are at that level where it makes no difference is questionable. Not sure how many are genuinely that well off of course, but certainly some are.

I've said this on another similar thread, but I do think there are three levels of tax "minimising":

1. Using ISAs, pensions and other mechanisms which were designed with the exact purpose of allowing you to minimise tax. Clearly legal, and nothing morally wrong either, you are doing exactly what the govt intended.

2. Taking advantage of rules which were designed for a different purpose in order to reduce your tax. So, for example, if you have two houses, "flipping" your designated principal residence so as not to pay CGT on either. Or a sole trader incorporating as a one-person company so as to pay corporation tax not income tax. Legal (tax avoidance), but morally rather dodgy.

3. Lying about your income so as not to pay tax. Illegal (tax evasion).

The same three levels apply to benefit "maximisation".

Quite, minipie- and thank you for being so much more succinct than me.

I really don't understand why anyone is being immoral by only paying the tax that they legally have to?

Because

And this is just IMO

there's a diffence between only paying the tax that you are legally obliged to, and hunting for tiny little loopholes and accidental slip ups that enable you to get out of it by.

It's no different than MPs claiming things they were entitled to but shouldn't really have by flipping residences. But there was outcry about that.

BUT I do not mean ISAs, buying before tax rises, making sure your charitable donation are declared.

I dunno, to me the differences are obvious but must be my Aspie traits coming to the fore agin.

sorry I emant get out of it by making the most of get out clauses that were never intended to exist.

i still dont get it, am not being obtuse i just dont think either is ethical (in fact i thought of a really good argument whilst i was in the doctors that ive now forgotten)

You don't have to be rich to practice tax avoidance, you just have to be self-employed the amount of things you can claim against and therefore pay less tax is staggering.

"they are paying the exact amount that the system requires them to."

exactly, can't see the problem with this and if there is a problem it is with the gov't not tightening the rules rather than the person who pays the tax...

It was to anyone who it applies to.

Ethics is not at all "just" ethics, plain and boring. It is a major area of philosophical debate. You seem to think that you have somehow got ethics nailed and that therefore everyone who disagrees with you is wrong, when in fact there is no "right" to be "wrong" against.

I have no idea whether you are a scary person.

I do know that that approach to ethics fed into the Inquisition and Facism.

miniepie - I don't think category 2 exists, or is at least very small.

Taking your examples:- "flipping" your designated principal residence so as not to pay CGT on either. It's quite hard to do this legally if you've had the home for any period of time, without actually going to live there. The rules are set up to encourage home ownership and investment.

"Or a sole trader incorporating as a one-person company so as to pay corporation tax not income tax. "

This isn't a loophole - it is deliberate to encourage people to set up as sole traders and start new businesses. Where it as seen as disguised employment (IT Contractors) it is being cracked down on.

smallwhitecat to me the distinction is "was this law intended to help people in my situation save tax". If so, ok to use it. If not...

So for example, it's clearly fine to use ISAs and pension contributions. It's not, however, ok to "flip" your designated principal residence so as to avoid CGT on both, because the PPR rule was intended to allow people not to pay CGT on their main home, i.e. only one property.

I agree it's not always clear but I think that rule could be applied to most tax avoidance situations.

minipie - Apart from that clearly ISN'T all the CGT rules on property were intended for or they would say "only the property you live in most of the time is exempt from CGT"

Maybe they're just badly drafted?

I think maybe it depends on if you see the purpose of tax breaks to be what politicians say they are or what they actually are.

This is why I'd like to wipe out the entire tax and benefits system, and start again with measurable aims for every variation.

(MIFLAW I have a degree in religion and philosophy PMSL loved the ethics modules but everyone else thinks I am boring for having done so....)

I am not agiainst everyone although probably you know me under a different MN name- Peachy?

There's a difference between trying to work out what's right for you and your oen self and trying to force in anyone else.

Anyway it's a bit rich to say someone is a bit when it's justa discussion on a talkboard is it not?

DAngerous is when you start campaigning and trying to force others into your ways, not just expressing an opinion and your own personal beliefs.

Neither of which I do.

BTW as for Fascism and inquisition; I follow the 'Quaker' path. We were not to blame.