Tax avoidance is legal and legitimate and must not be conflated with illegal and immoral acts

HMRC’s ‘don’t get caught out’ campaign is not using the correct terminology when educating taxpayers about scams and tax evasion and risks conflating illegal immoral acts with legal and legitimate behaviour, say leading audit, tax and business advisory firm, Blick Rothenberg.

Robert Salter, a Director at the firm, said, “HMRC have launched a campaign called ‘don’t get caught out’ where they warn taxpayers about tax scams. Throughout this online advice, HMRC consistently refer to ‘tax avoidance schemes’, but the arrangements they are describing are not tax avoidance, they are clear examples of tax evasion or tax fraud.

“It is good that HMRC is warning taxpayers about the risks that arise with these tax scams, but by referring to tax evasion or tax fraud as tax avoidance, HMRC risk confusing taxpayers as to what they can legitimately do and what is simply illegal and immoral.

“This confusion could mean taxpayers are out of pocket when they could be reducing their tax bill though perfectly legitimate means. Tax scammers may find it easier to ensnare victims if inconsistent or incorrect terminology allows them to muddy the waters around what is or is not legal.”

Tax and business advisory firm, Blick Rothenberg are saying that “tax avoidance is legal and legitimate” by simply placing monies into a pension scheme, but illegal if businesses are lying about what they have done with the tax owed.

Salter added, “Tax avoidance is legal and legitimate; it can be as simple as putting money into a pension scheme or purchasing additional holiday from your employer for a reduced salary.

“Tax evasion is when an individual or a business deliberately decides to commit a crime and allow illegal actions to take place to evade paying tax.

“But if when using legal methods to avoid tax, an individual or business is found to have lied, hidden data or assets from the authorities, this crosses the line and becomes tax evasion. A clear distinction between the two terms and what actions constitute a crime is vital for taxpayers to understand and could save HMRC a lot of headaches.”