What’s the difference? As former Chancellor of the Exchequer Denis Healey once said ‘the difference between the two is the thickness of a prison wall.’
Tax avoidance involves using legal means to reduce your current or future tax liabilities. Tax evasion means taking illegal measures to avoid paying taxes. Jimmy Carr has been in the news recently for using a legal offshore tax avoidance scheme which enabled him to pay as little as 1% tax.
The Government have vowed to clamp down on tax abuse with new rules, and are consulting on a Treasury-commissioned report into the anti-avoidance tax rule. They are hoping to bring legislation forward in the Finance Bill of 2013. Chancellor Osborne said that he ‘regards tax evasion and aggressive tax evasion as morally repugnant.’
Accountants have warned that opportunities for the wealthy to minimise their tax liability by using aggressive legal schemes are certain to become fewer, as HM Revenue and Customs take a much tougher stance on avoidance.
Lee Young, a Partner in our Wills & Tax Team, says “One of the most important steps you can take to protect your assets is by making a will. Inheritance Tax currently stands at 40% (on estates valued at over £325,000). This is a huge amount of money that could have been bequeathed to your loved ones.”
Get in touch if you need more information on this topic. For a free initial meeting please call 01202 499255 and Lee or a member of his team will be happy to discuss any questions you may have.