Tax Aviodance And Evasion Flashcards
Tax avoidance
Using
Any legal method
To reduce and entity’s tax burden
Even if the method isn’t following the intent of the law
E.g. artificially using foreign jurisdiction s with low tax rates
Do promoters of tax avoidance schemes have to disclose details to HMRC?
Yes
(To close loopholes quickly)
Can the courts disregard elements of transactions that have no commercial purpose? (I.e. to avoid tax)
Yes
What allows HMRC to challenge abusive tax avoidance arrangements?
The GAAR
GAAR
General anti-abusive rule
Where are the 5 Standards for Tax Planning?
In the PCRT
PCRT
Professional conduct in relation to taxation
Tax planning
Form of tax avoidance
Where taxpayer uses tax legalisation
Legally and as intended
To minimise tax bills
But pay the right amount of tax
(E.g. claiming marriage allowance)
Tax evasion
Illegally
Seeking to pay less tax than is due
By deliberately misleading HMRC
Tax evasion penalties
Risk of criminal prosecution
Fines and/or imprisonment
2 main forms of tax evasion
- Suppressing information
E.g. failing to declare taxable income - Submitting false information
E.g. claiming expenses that have not occurred
Money laundering definition
- Concealing
Disguising
Converting
Transferring
Removing (from UK)
Criminal property
(Including proceeds of tax evasion) - Entering into
Becoming concerned about
An arrangement
They know
Or suspect
Facilitates the acquisition
Retention
Use
Or control
Of criminal property
(Including proceeds of tax evasion) - Acquiring
Using
Having possession of:
Criminal property
(Including proceeds of tax evasion)
Anti money laundering laws accountants must follow
- Proceeds of crime act
As amended by the serious crime and police act - Money laundering regulations
What anti money laundering plan does the ICAEW support?
UK Economic Crime Strategic Board (ECSB)’s economic crime plan
Anti money laundering procedures
Register with an appropriate supervisory body
E.g. ICEAW
Appoint a money laundering reporting officer
Make internal reports of suspicions
MLRO decides whether to report suspicions to NCA
Using a Suspicious Activity Report
Establish internal procedures
To reduce risk of involvement in ML schemes
(E.g. regular staff training)
Verify the identity of new clients
And retain relevant documents
For 5y
After termination of client relationship
Maintain records of
All transactions undertaken Fri each client
For 5y
After completion of transaction
