Category: Finance

Does the UK Encourage ‘Tax Avoidance’?

Tax avoidance is often used, albeit erroneously, inter-changeably with tax evasion but for clarity sake the two terms are not the same. While tax avoidance falls within the ambit of the law of the nation in where it is implemented, tax evasion is an act against the law irrespective of the jurisdiction.

So, to the question raised (that is, the topic of this discourse); the answer may vary depending on a number of factors. However considering the government’s intense clampdown on some individuals and organizations in recent times, one could be tempted to give a definite YES – the UK had indeed encouraged tax avoidance to a detrimental end. This is informed by the looseness perceivable in tax laws prior to this very moment.

That laxity has seen a good number of persons and/or organizations pulled a fast one on taxmen by contriving complex schemes that enable them to cheat their way through. Hence, a legally permitted trend is turned into tax evasion.

UK’s government stance on tax avoidance

Of course, the UK’s law encourages law tax avoidance under certain circumstances. Examples of such include utilization of the childcare voucher; saving into pension at the workplace, using the tax-free Isa allowance, giving to charity organization, investing in small companies amongst some other acceptable avenues.

However, with Her Majesty’s Revenue and Customs (HMRC) swinging into action to bring an ample of tax avoidance schemes under scrutiny, there could be a narrowing of the extent to which tax avoidance is permitted in the days ahead. HMRC’s move is coming on the wake of the call for the UK government to end financial secrecy in overseas territory in order to ensure tax transparency. Furthermore, it is worth noting that MPs are making plans to start reviewing various trust deed reforms especially as it concerns UK’s Crown dependencies and overseas territories. So, trust deed Scotland might have it a bit rough in the coming days.…

Finance