Remember the discussion about tax avoidance being legal on the benefits thread?

[LadyBiscuit]

I was shouted down by a lot of people who said that it was okay because it wasn't actually illegal and benefit fraud cost the UK a lot more. The HMRC estimates it costs us £14bn a year. Kind of puts benefits cheats into perspective a bit doesn't it?

Not sure why you've linked to a paedophile report.

Don't know the thread you referred to but tax avoidance is legal, tax evasion is not.

Oops - here's the link. But if you listened to PM today there was a tax expert basically saying that the line between tax avoidance and evasion is a hugely grey area which is what I was saying on the other thread but got shouted down. I work in the industry (although I am not a tax specialist) and I know the company I work for gets paid £££s for helping people implement what are called high risk or aggressive tax planning ideas - basically the ones which are sailing very close to the wind. It really isn't black and white - unlike benefit fraud - and costs the country a lot more than a few dodgy housing benefit claims.

Tax avoidance is using legal methods to minimise your tax bill - one ready example is ISAs.

Tax evasion is breaking the rules, or finding unlegislated "grey areas".

It's only complicated because UK currently has the most complex tax system anywhere in the world ever.

Has the Govt the balls to tear up the 18inch high rule book, and go for something both simpler to implement and harder to evade?

Tax avoidance is legal AND so is claiming the benefits you are entitled to. I always think this when the relevant threads come up.

It is much, much more complicated than that HN as I said but feel free to carry on believing the fairy tales

But OP, if you work in the industry you know that things have changed in recent years. It used to be that non taxpayers would work out loopholes and argue with the taxman afterwards. Nowadays they have to have agreement to the tax saving plan before the event.

If you are involved in a marketed avoidance scheme you have to declare this on your SA return. If it is discovered at a later date that the scheme doesn't work, and that in fact tax has not been avoided and is due, then it is relatively simple to work out who has done what.

It is a grey area in the sense that many schemes don't work, but often the courts are the ones to ultimately decide this. It is a grey area in that the decision about whether it works or not may alter between tribunal, high court and house of lords.

HMRC's page on disclosure of tax avoidance schemes

I can't believe that I am talking about tax on a Saturday night.

Yes indeed I do senua. I am merely pointing out that tax evasion avoidance is a v murky area whereas a lot of posters think that if something is 'legal' it is fine. It's much more complex than that.

onimolap - I would like to see Butterworths go in the bin personally but I don't think it's going to happen any time soon!

Totally agree that just because it's "legal" doesn't mean it's fine,and that it is hideously complicated.

Horribly, hideously, complicated.

I may have to go and have a lie down now

Your idea of 'complex' seems to be that tax avoidance costs more than benefit fraud and therefore it is more reprehensible. I don't follow your logic.
Education costs more than benefit fraud, shall we close that down?

the difference is those avoiding or seeking to minimise tax are most likely working and paying some tax already

unlike the benefit cheats

It's quite simple senua but I shall explain it in easy to understand terms. There is a huge push on reporting benefit fraudsters in the UK and they are being portrayed as people who are hugely important to our economic woes. Whereas, in fact, extremely wealthy people ducking and diving to avoid their taxes cost our economy a huge amount more. Is that simple enough for you?

EA - why is paying about 25% of the tax that you're supposed to pay any less reprehensible than benefit fraud? It's blue collar crime as opposed to white collar. It's no better, it's still stealing.

Iam not so sure it IS that complicated. V. rich people employ guardians to make it so, based on current legislation, which is being challenged on a much broader scale than just the UK.

yes we do have hideously complex regulations for some, but for the vast majority it is fairly plain.

and the bleat about losing income as some v. rich people will take their business abroad smacks of "holding the country to ransom" which is what those same people accuse trade unions of doing IF they wish to protect their mebers interests.

I think the difference is the 'moral guilt' that is visited upon "benefit cheats" whereas if you cleverly avoid paying your dues, it's viewed as a pat on the back for being so "clever". Still helping to fuck the country, but that's ok as you are "one of the lads".

What Pan said

They are lumping avoidance and evasion together

Not sure I would trust HRMC to estimate anything given their recent PAYE coding failures

Evasion is a crime

Avoidance is not

I think you're right Pan. God that's so fucked up I don't know where to begin :(

A better word is "turpitude" - you are behaving v. poorly, morally. But it's okay if you are very wealthy.

"paying about 25% of the tax that you're supposed to pay"

What do you mean "supposed" to pay? They do pay the tax they are "supposed" to pay - otherwise it would be evasion, not avoidance.

But if avoidance works and the taxpayer successfully avoids paying tax and the scheme works, then no tax was due. They may be morally questionable if they do not stay within the intention of the law but have not committed an illegal act.

If someone maximises the amount of benefits they can claim legitimately then that isn't illegal. If someone lies and gets money that they are not entitled to then that is theft.

I have said this before, benefit fraud is equal to tax evasion, not tax avoidance, in my opinion.

no Eldon. trust them MUCH more as the issue about PAYE has been due to a much better computer system working things out fairer. To the detriment of some, yes.

Eldon Ave - I really hope you're a beneficiary otherwise that's a bit deluded. It's a bit deluded whatever. There is a very, very fine line between evasion and avoidance and some of that is about arguing your case with HMRC. Unless you are very far off that line, then you can't argue white is white I'm afraid, however comfortable that might make you feel.

"I work in the industry and I know the company I work for gets paid £££s for helping people implement what are called high risk or aggressive tax planning ideas"

If you think it is so morally objectionable, what are you doing working in this industry? Sounds a bit hypocritical to me.