Well, no, not really

The errors made by HMRC also include, as the PAC note, HMRC’s failure to include tax avoidance that is abusive but about which they feel there is little they can do. This includes most of the abuse of international tax by large companies and much of the tax planning of the wealthy. One could, of course, accuse HMRC of replicating much of the class bias already apparent in their treatment of tax abusers in their tax gap estimates as a result, because it is undoubtedly true in the U.K. that only the ‘little people’ get prosecuted for their tax abuse. It could also simply be said that this systemically understates the tax gap and had always done so, again as I have long emphasised.

HMRC tries to estimate how much tax should be paid if everyone obeys the law. Then subtracts from that how much is paid which gives us the gap.

OK, well, so be it.

Tax avoidance is obeying the law. Even if Snippa thinks that the law should be different, or that avoidance shouldn’t be legal, or that it is the spirit, not letter, of the law that should be obeyed it is still true that tax avoidance, by definition, is legal. So it’s not what HMRC is trying to measure.

9 thoughts on “Well, no, not really”

  1. Dennis, Odin's Tax Collector

    The errors made by HMRC also include, as the PAC note, HMRC’s failure to include tax avoidance that is abusive but about which they feel there is little they can do.

    Tax avoidance is legal. Whether a particular bit of it is “abusive” or not is a judgment, and as such, has no bearing on how HMRC treats it. There is nothing HMRC can do – legally – to end tax strategies that qualify as tax avoidance in the eyes of the law. And rightfully so. That’s the job of the elected officials in Parliament… sorting out tax law that needs tweaking or revamping, as the case may be.

    As a so-called tax expert, you’d think he’d have grasped that by now.

  2. I avoid tobacco tax by never buying tobacco.
    I’ve avoided alcohol tax since last year by not buying alcohol.
    I’ve avoided airport tax by not using an airport.

  3. I avoid tobacco tax by never buying tobacco
    I’ve avoided alcohol tax since last year by not buying alcohol.
    I’ve avoided airport tax by not using an airport.

  4. I made large pension contributions specifically to avoid tax. In the few years after pension “A-Day” when I could and did contribute almost 100% of my earnings into my pension was that abusive? I think so, but but the Government had enacted legislation specifically saying that I “could” do that so it was abusive tax avoidance encouraged by the Labour Government.

  5. Does the tax gap take into account of all the people who could pay into pensions or ISAs and save tax but don’t, for whatever reason? If not, why not?

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