Partner Article

Darth (E)Vader ? or is that Avoider?

Last week, the Chancellor of the Exchequer hailed the fact that the latest Star Wars film is to be made in the UK. He is reported as saying that this was clear evidence that the tax incentives are attracting the largest studios back to this country.

He’s right to be happy – if tax incentives mean that more business is carried out in the UK, then that has to be good for the economy. In all situations, those bringing their business or wealth to the UK should be applauded, but some groups of people who do exactly that - such as those who are regarded as non-UK domiciled - are accused of ‘avoiding’ taxes.

The problem is created by Government and others interchanging the words ‘avoidance’ and ‘evasion’. Incentives to avoid tax are, and should, be provided by Governments to encourage business growth and entrepreneurship. However, when these very incentives are used, no-one should then be accused of tax avoidance. After all, tax avoidance is entirely legal.

The regular pronouncements from Government liberally use the phrase “tackling avoidance, evasion and fraud”, with the distinctions between these words completely blurred. Even last week, in an announcement by HMRC , the Chancellor noted that the Prime Minister “has made it a key priority to drive an international effort to increase transparency and clamp down on tax avoidance and evasion”.

Evasion is illegal and carries high penalties, including possible prosecution. On the other hand, while avoidance may carry a high level of moral debate, depending on the extent of the avoidance, it is not illegal. It is time for those in authority to be clear on the distinctions and continue to applaud those who move their business, personally come to the UK or invest in growing businesses because of tax breaks, rather than have them hide in fear of accusation.

This was posted in Bdaily's Members' News section by George Bull .