ATXP6 UK
Syllabus A6. Value Added Tax A6b. Principal sources of revenue law and practice

A6b. The difference between tax avoidance and tax evasion

Syllabus A6b)

Principal sources of revenue law and practice

Tax EVASION is ILLEGAL

The main forms of tax evasion are:

  • Not giving all information

  • Giving false information

Tax AVOIDANCE is LEGAL

It's arranging your income to minimise tax - although HMRC are introducing anti-avoidance legislation to lower the advantages to the taxpayer

Tax avoidance features..

  • No misleading information given

  • Can use loopholes in the tax system

The General Anti-Abuse Rule (GAAR)

This fights artificial and abusive schemes (unreasonable courses of action) which are used to avoid paying tax