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Avoidance debate is an opportunity for tax professionals, says LexisNexis

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The current debate about tax avoidance is an opportunity for tax professionals to show clients what they really do, according to Chris Jones, LexisNexis Director of Tax Markets.

Tolley, the LexisNexis brand that includes Tax Journal, has published a ‘client-friendly’ tax avoidance factsheet in an effort to counter possible confusion about the role of tax advisers.

Responding to recent national media coverage focusing on ‘aggressive’ tax avoidance, Jones (pictured) said that ‘taking a stand against behaviour that brings the profession into disrepute’ was to be welcomed.

He added: ‘The real issue for most advisers is the increased perception by the public that the tax profession is a threat to the tax revenues of the UK. Nothing could be further from the truth.

‘The tax profession is a vital component of the UK tax system. Under self assessment the burden of administration falls on the taxpayer, as does the responsibility to interpret the law. Tax professionals meet both these needs for the taxpayer. Whilst HMRC is responsible for enforcing our tax system, the accountancy, tax and legal profession make it work.’

The factsheet noted that the terms tax avoidance and tax evasion had been used ‘interchangeably’ in some of the recent media coverage. It offered the following definitions:

Tax planning is achieved through reliefs and differences in rates which were intended by parliament. Tax avoidance is often considered to be achieved through exploiting reliefs and differences in a way which was not intended by parliament.

‘Whilst the intention of parliament may be a consideration, the judiciary determine how tax legislation should be interpreted. This is why tax compliance and tax advice are always based on the judiciary’s interpretation of the law, not just the intention of parliament.

‘This is why distinguishing what is “artificial” is difficult and determining what tax avoidance is can be a subjective matter.

Tax evasion is where a “person is knowingly concerned in the fraudulent evasion of tax by that or any other person”. It is a deliberate act of deception which reduces tax payable or increases tax repayable. Tax evasion is a crime which can result in imprisonment of up to seven years, as well as a fine.’