According to government website GOV.UK: “Tax avoidance involves bending the rules of the tax system to gain a tax advantage that Parliament never intended. It often involves contrived, artificial transactions that serve little or no purpose other than to produce this advantage. It involves operating within the letter, but not the spirit, of the law.”
Furthermore, states GOV.UK: “Most tax avoidance schemes simply do not work, and those who use them may end up having to pay much more than the tax they tried to avoid, including penalties.”
Some years ago, many high-profile celebrities were exposed by the media as making significant tax savings by investing their money into “aggressive tax avoidance schemes”. Some schemes were later successfully challenged by HMRC. Many global heavyweight companies have also been accused of “avoiding tax by shifting revenue and profits through tax havens or low-tax countries”.
Let’s take a look at some examples of tax avoidance…