Ethics - Tax Avoidance

Question 1

Define tax avoidance

Answer 1

Using any legal method to reduce an entity’s tax burden, even if the method is not following the intent of the law

Question 2

What are promoters of tax avoidance schemes now required to do?

Answer 2

Disclose details to HMRC, enabling HMRC to close loop-holes quickly

Question 3

What does the general anti abuse rule (GAAR) enable HMRC to do?

Answer 3

GAAR enables HMRC to challenge abusive tax avoidance arrangements

Question 4

How can courts help prevent tax avoidance?

Answer 4

They may disregard elements of transactions with no commercial purpose (e.g that have been designed with the sole purpose of avoiding tax)

Question 5

Define tax planning

Answer 5

A type of tax avoidance where the taxpayer uses the tax legislation legally and as intended to minimise tax bills, but pay the correct amount of tax e.g claiming marriage allowance