Introduction
Nobody likes paying tax.
Why does it matter? – Tax Gap - £42 billion. One sixth or £7 Billion is tax evasion and another £7 Billion is tax avoidance.
The balance is uncollected taxes.
It is for this reason we have the crucial distinction between avoidance (legal) and evasion (not legal).
Dennis Healey famously commented that the difference between tax avoidance and tax evasion is
‘the thickness of a prison wall!’
The battle with the Revenue is not new:
Lord Clyde –
‘No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores.
The Inland Revenue is not slow, and quite rightly, to take every advantage which is open to it under the Taxing Statutes for the purposes of depleting the taxpayer’s pocket.
And the taxpayer is in like manner entitled to be astute to prevent, as far as he honestly can, the depletion of his means by the Inland Revenue.’
Ayrshire Pullman Motor Services v Inland Revenue [1929]
A. EVASION
HMRC’s Affluence Unit – Evidence of a crackdown
Background - The Affluence Unit was established in September 2011.
It was focusing on around 200,000 people who had net wealth between £2.5 million and £20 million.
It now also deals with individuals who earn more than £150,000 per annum and have net wealth between £1 million and £2.5 million (January 2013).
The move follows the success of the High Net Worth Individuals Unit (HNW) set up to deal with individuals whose wealth exceeds £20 million.
HMRC will often arrange meetings with individuals and one of the first lines of attack was offshore property and any rental income from foreign property not declared or property bought with ‘dirty money’.
The Affluence Unit announced that it was recruiting an extra 100 inspectors so now has between 200 and 300 inspectors across six locations in UK.
The target is to recover £586 million by the end of 2015.
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