Policymakers and politicians have blurred the lines between tax avoidance and tax evasion for some years – and they are the same in the minds of many.
But tax law in Britain and many other countries dictates tax avoidance is legal, while tax evasion is a crime.
The right for taxpayers to reduce the amount of money they pay HM Revenue and Customs (HMRC) is asserted in court cases that date back almost a century.
Any taxpayer, they say, has the right to arrange their financial affairs as they see fit, providing they are honest and transparent in their actions.
To lie about financial matters or cheat the taxman is viewed as a criminal offence.
Call to prosecute tax advisers
In the past, some have even called for tax advisers to face prosecution for helping tax avoiders.
Their critics say lawmakers such as MPs are to blame for any loopholes and flaws in the tax system because they agreed the law in the first place.
One leading financial services figure speaking out against pillorying tax advisers is Nigel Green, chief executive of deVere Group, one of the world’s leading financial advice companies. deVere has more than 80,000 clients, who are mostly expats, who live in 100 different countries.
“For someone who had a career as a tax lawyer, it seems bizarre that some MPs appear unaware of the differences between tax avoidance, which is perfectly legal and can form a sensible part of a robust tax planning strategy, and tax evasion, which is illegal and therefore punishable under the law,” said Green.
Flawed argument
“The notion that it will be illegal to advise someone on legally mitigating their tax liabilities is surely flawed.
“Not only is it flawed it is utterly disingenuous. If politicians, and others, are unhappy with the system as it currently stands, it is MPs who need to answer questions. It is they who have the power to change the country’s tax laws.
“Maybe there is indeed a need to overhaul the complex system but it is not financial advisers who can do this.”
Those named in the Panama Papers revelations may be guilty of tax avoidance – but as the law says, this is no crime if conducted honestly and transparently.
