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

[LadyBlaBlah]

Bearing in mind that benefit fraud (feckless scrounging wasters) and error costs us £5.2b, why the emphasis on this, rather than tax avoidance?

I await LFN's explanation!

DP's mum used to work in fraud and I believe they only investigate tax fraud over a certain amount. So quite a few are deliberately only fraudulently claiming tax back under that amount, and not getting investigated

Oh. That's fine then.

Funny how they will chase up £60 a week though

there was a great sketch about this on the now show (R4 comedy) recently.
My answer would be, because the cuts are ideologically based and the deficit is the excuse which the tories have been dreaming of for decades...

Great isn't it LadyBlaBlah?

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."

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.

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

I like your distinction however there is a further distinction on tax avoidance in the UK - tax avoidance is also a course of action designed to conflict with or defeat the evident intention of Parliament.

There is a distinction between avoidance and tax mitigation, which afaik is more what you describe above?

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.

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.

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.

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

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

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

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.

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.

There is, however, a further distinction drawn between tax avoidance and tax mitigation. Tax avoidance is a course of action designed to conflict with or defeat the evident intention of Parliament: ( IRC v Willoughby.) Tax mitigation is conduct which reduces tax liabilities without ?tax avoidance? (not contrary to the intention of Parliament), for instance, by gifts to charity or investments in certain assets which qualify for tax relief. This is important for tax provisions which apply in cases of ?avoidance?: they are held not to apply in cases of mitigation.
The clear articulation of the concept of an avoidance/mitigation distinction goes back only to the 1970s. The concept originated from economists, not lawyers. The use of the terminology avoidance/mitigation to express this distinction was an innovation in 1986: IRC v Challenge.

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?

Well, I will ask a question right back to you based on the OP.

If the govt are to use credit agencies to snoop on what people suspected of benefit fraud are spending, why not do that for people who are suspected of tax avoidance and evasion.

Why is it so different?