Evasion or Avoidance?

Blog, Taxation, Peter McCaffrey

There’s an interesting story developing in the UK where many left-wing groups, supported by over-the-top media stories, have been building up pressure against businesses that ‘evade’ taxes.

I put evade in inverted commas there because none of the businesses being attacked have actually broken any laws, they’re just using pretty standard methods to reduce their tax bills – otherwise known as tax avoidance.

Tax evasion is when you pay less tax using illegal methods, tax avoidance is when you pay less tax using legal methods.

The left-wing groups claim that while tax evasion is legal, it’s not moral.

But we have tax law (and actually all other kinds of law) for a reason, so that there is a clear line about what you can do and what you can’t.

Without this legal guidance, people and businesses would have no objective reference to guide their actions, they would be forced to try and determine what the public may or may not consider to be moral when deciding what to do.

That’s not the way to operate a businesses or a society.