CGT39 Intro to Anti-Avoidance

Question 1

‘Tax planning’ definition

Answer 1

means using the tax reliefs in the tax legislation in such a way as to keep one’s tax liabilities as low as possible. It encompasses such things as inter-spouse transfers
to utilise allowances and exemptions

Question 2

‘Tax avoidance’ implies ….

Answer 2

the taxpayer entering into a more elaborate scheme designed
specifically to bend the rules of the tax system to avoid tax. ‘Tax avoidance’ means using the tax legislation to try to secure a tax advantage.

Question 3

The difference between ‘tax planning’ and ‘tax avoidance’ is ….

Answer 3

not necessarily clear cut.
‘Tax avoidance’ may involve elements of criminal behaviour.

Question 4

‘Tax evasion’ implies

Answer 4

the taxpayer seeking to reduce their tax bill by illegal means, eg by failing to disclose income or gains, deliberately understating income or overstating expenses and using improper means to disguise the true picture. Tax evasion is a criminal offence which can be punished by a custodial sentence.

Question 5

A penalty may be charged on …

Answer 5

an enabler of an abusive tax arrangement which has been
defeated.

Question 6

Case law has concluded that a ‘pre-ordained’ series of transactions containing inserted steps that have no commercial purpose apart from tax avoidance….

Answer 6

can be set aside.

Instead, the courts will look at the purpose and spirit of the legislation when making their judgments.