Seminar Takeaways - Tax Avoidance
On Tuesday 14 June, Tom Wallace, Director at WTT Consulting came in to speak about Tax Avoidance. Over the past few years, the lines between tax avoidance and evasion has been blurring. Previously, it was simple, tax evasion was illegal and tax avoidance was legal. Now we have tax evasion (still illegal), tax avoidance (not technically illegal, unless it is) and tax planning (legal).
Tom first looked at examples of tax evasion, avoidance and planning. He highlighted that tax evasion usually requires intent to defraud HMRC by deliberately underdeclaring a tax liability. From HMRC’s perspective, tax avoidance usually involves contrived or artificial arrangements whereas tax planning is the use of reliefs in the way Parliament intended (e.g. pensions and ISAs).
Nowadays, courts and Tribunals are encouraged to make decisions not just in line with legislation but also taking into account ‘what Parliament intended’. This was referenced in Pepper (Inspector of taxes) v Hart [1992] UKHL 3 where the judge sugggested that Hansard and references to parliamentary material should be permitted to provide a better understanding of Parliament’s intention when making the law.
Finally, Tom looked at the plethora of tools available to HMRC for tackling Tax Avoidance including the accelerated payment and follower notice legislation. He also pointed out that the Professional Conduct in Relation to Taxation is an excellent place for tax advisers to start if they are not sure whether a suggested structure or request for advice might fall foul of tax avoidance provisions.
For queestions on this topic or in relation to Contractor tax, please feel free to Contact LTN or Tom Wallace at thomas.wallace@wttconsulting.co.uk
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