Module 6

Avoidance, evasion and compliance: where the line is drawn, anti-avoidance rules, audits, penalties, disputes and the adviser’s duties

Every taxpayer has a lawful right to arrange affairs so as to pay no more tax than the law requires. Every state has a right to collect what the law imposes. The line between them is where a great deal of tax law lies. At one end is ordinary planning: using a pension relief or an allowance. At the other is evasion: hiding income. In between is avoidance, a grey zone in which clever arrangements follow the words of the law and defeat its purpose, and which courts and legislatures have fought for a century. This module explains how the line is drawn, what rules and doctrines police it, how an audit and a dispute work in practice, what the penalties are and what an adviser may and may not do.

General education on taxation law, using invented people, businesses and figures. It states common principles in simplified form and does not describe any one country’s law, which differs and changes; tax rules, rates, thresholds and deadlines are strict and local. It is not tax or legal advice. Consult a qualified adviser in the place that matters.