tax

Question 1

is tax planning legal or illegal?

Answer 1

legal

Question 2

is tax avoidance legal or illegal?

Answer 2

legal

Question 3

is tax evasion legal or illegal?

Answer 3

illegal

Question 4

what is tax planning?

Answer 4

• availing yourself of legitimate tax concessions
• finding legal ways to reduce tax liability
• legal & acceptable

Question 5

what are some examples of tax planning?

Answer 5

• opening an ISA account
• choice of company car
• shifting income & assets within a marriage
• timing of asset disposals
• using allowances sensibly (PA, AEA)

Question 6

what is tax avoidance?

Answer 6

• any legal method of reducing taxpayer liability
• does not mean it is acceptable or effective at saving tax
• often involves artificial, contrived transactions that only serve the purpose of having tax advantage
• is not within spirit of the law

Question 7

what is anti avoidance legislation?

Answer 7

• used to close legal loopholes which taxpayers use
• participation in certain TA schemes must be disclosed to HMRC since they are so popular

Question 8

what is GAAR?

Answer 8

• general anti abuse law
• enables abusive TA arrangements to be challenged

Question 9

what is tax evasion?

Answer 9

• illegal
• pay less tax than is due by deliberately misleading HMRC
• can be subject to criminal prosecutions

Question 10

what are some examples of tax evasion?

Answer 10

suppressing info to HMRC :
- not paying tax on a cash in hand firm

providing HMRC with false info :
- defrauding
- creating fake documents