Everyone would like to pay less tax!

It’s important to minimise your tax liability legally. Deliberately avoiding paying tax owed to HMRC is defined as tax evasion and is a criminal offence.

Tax evasion can involve:

• Under declaring your taxable income.
• Inflating your expenses or other deductions.
• Not submitting tax returns.
• Not declaring assets you own (evading capital gains tax, for example).

Tax evasion vs tax avoidance

Tax evasion is very different to tax avoidance. Tax evasion is illegal.

Tax avoidance applies legal strategies and tools to reduce the amount of tax you owe. It typically involves using tax incentives, deductions and exemptions provided by current tax legislation. While tax avoidance is legal, there is debate about its ethical implications.

Legality vs Intent

The key difference between tax evasion and tax avoidance is the illegal intent and deliberate deception of tax evasion.

Tax avoidance is legal but involves strategic planning to reduce tax obligations within the bounds of the law. ‘There are ethical considerations concerning tax avoidance,’ says Suzanne Spicer, founder of Spicer & Co Chartered Accountants in Dunstable. ‘Some approaches to tax avoidance aggressively target loopholes in tax legislation.

‘Inevitably, these attract HMRC’s attention. This ultimately places individuals and businesses in HMRC’s spotlight. The end result could be a tax investigation, which is stressful and expensive. We recommend paying the right amount of tax and avoiding the dread of receiving an unexpected letter from HMRC.’

‘Discrepancies are not always intentional. Mistakes happen, ‘ adds Suzanne. It’s important to be open and honest with HMRC … and with the professional who is giving you guidance.

‘We offer a Tax Investigation Service for our clients which means that you won’t incur any additional accountancy fees should HMRC investigate you and/or your business. This is available to all our clients and offers fantastic peace of mind.’

Would you like to pay less tax?

Would you like reassurance that your tax management is totally compliant and ethical?

Talk to the friendly tax specialists at Spicer & Co. Our tax planning and advice will minimise your tax bill legally and ethically.