You don’t have to go far through the public prints to find all sorts of blood curdling tales about how the Treasury is being ripped off by varied forms of tax avoidance and even aggressive tax avoidance. And yet the truth is that as a thing tax avoidance doesn’t actually exist. So it isn’t as we’re told in the Telegraph, that tax avoidance is actually a good thing, it’s that it just doesn’t happen:
Successive governments have left us with a tax regime so complex it verges on chaotic.
Which is exactly why we should be suspicious of politicians who talk imprecisely about “tax avoidance” and “tax evasion” – or who muddle the two terms, or use them interchangeably.
There is nothing wrong with tax avoidance.
Tax avoidance is what everyone does, not just the wealthy. It’s what we do when we save in Isas and pensions, or in Junior Isas for our children.
There’s no doubt at all that there are attempts to avoid tax. Sticking your money in an ISA or simply not declaring millions in income are both attempts to avoid tax. But we have a system which decides which of those plans is successful in doing so. That system being HMRC in the first line, the various tax tribunals in the second and then on and up to the European Court of Justice as both Vodafone and Cadbury found out. The end result of this system of adjudicating upon attempts is that there’s no room left for tax avoidance to actually happen in. For, obviously, once the courts have had their say either whatever is going on is obeying the law of the land or it isn’t. And when it is decided that it isn’t that’s tax evasion. And when it’s decided that it is according to said law that’s not actually avoiding anything, is it? It’s paying, in full, one’s dues as Parliament has decided you ought to.
There really isn’t anything called tax avoidance. There’s only obeying the law and not obeying it.