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Panama offshore tax evasion

With over 11 million documents leaked about offshore tax evasion today, it is an opportune moment to set out a few points relating to this issue.

Firstly, a few journalists appear to be becoming confused about the terms tax evasion and tax avoidance. Tax evasion is illegal and it concerns activity in breach of laws in order to reduce the amount of tax which is payable. A simple example would be the failure to declare income on a self-assessment tax return. Tax avoidance is the minimising of a tax payers tax liability within the law.

The current government has quite rightly set out the goal of reducing tax evasion. Interestingly the government has also set out to reduce, what it calls aggressive tax avoidance. There does not appear to be an exact definition of what 'aggressive tax avoidance' means and how it differs from non-aggressive tax avoidance!

The government refers to the former being immoral. Surely if the government believes that by following the law leads to too little tax being paid, then the answers should be for the government to change the law.

It is interesting to see press reports which indicate that some of the 11million documents refer to relatives of members of the cabinet being involved in offshore tax evasion. Presumably, if these reports are correct then offshore tax evasion by politician's relatives is not immoral whereas tax avoidance by others is immoral!

 

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Tony Shackleford
Tony Shackleford

Chartered Accountant offering support to Limited companies and the self employed.

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