£10bn Cost of Tax Avoidance
Cost of avoidance equivalent to 3p on income tax
2nd March 2006
HM Revenue and Customs (HMRC) have estimated that the treasury is losing out on tax receipts worth around £10bn as a result of tax avoidance schemes, a figure equivalent to about 3p on the basic rate of income tax.
Tax avoidance is a legal method of reducing tax bills by exploiting loopholes in tax regulations, and should not be confused with tax evasion, which is the criminal offence of fraudulently paying less tax through, for example, false accounting.
However, the line between the two is becoming increasingly blurred, according to HMRC, as the number of 'simple' avoidance schemes is being reduced by the plugging of loopholes. Since 2004, accountants must report any avoidance schemes they intend using, which gives the government chance to introduce measures to make the scheme unworkable.
Read More: BBC Moneybox : Billions 'lost to tax avoidance'
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More on Tax Avoidance and Evasion : Taxman Asks for Police Powers (News, 15/08/2006), Chancellor Gets Tough on Tax Avoidance (News, 18/03/2004) |
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