Tax Evasion vs. Avoiding Taxes

Date: Wednesday, September 17, 2008
Time: 11 PM
Place: Kitchen

Every year, lawyers and accountants argue out thousands of
tax cases for their usually well-off clients. Whatever the decisions
in these cases, one tax law judgement is never far from
the thoughts of the legal teams representing the Inland
Revenue and the tax-payer. And that’s an old case from
70 years ago known as Inland Revenue Commissioners vs.
Duke of Westminster.
The judge in this 1936 vintage tax law case concluded: ‘Every
man (women rarely paid taxes in those days) is entitled if he
can, to order his affairs so the tax attaching under the appropriate
act is less than it otherwise would be.’
Translating out of legalese, this means you can take advantage
of every tax-break going. You do not have to pay as much as
the government would like if you don’t have to, whether
you’re as rich as the Duke of Westminster was or just an average
person.
Following the rules laid down in this judgement is called
avoiding tax. Avoidance is totally legal. What’s illegal, and
what can cause you to end up in one of Her Majesty’s less
choice establishments as an enforced guest of the tax-payer,
is evading tax. Evasion is strictly illegal.