Advanced Taxation

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UK Taxation System

UK Taxation System


The modern system of income taxation of the population was founded in 1973. As a result of this reform, the income tax was unified and presented in a coherent single system. Personal income tax shall be paid the entire population of Great Britain. Revenues from the United Kingdom are subject to tax, regardless of their origin. A non-resident pays taxes in the UK only on income received in this country. British tax law provides two concepts ordinarily resident and domiciled (Sandmo, 2005, Pp. 643).

Tax Avoidance and Evasion

In the world of taxes there are two terms that are used by taxpayers and tax administration agencies to describe the decision of taxpayers pay no taxes.

Tax avoidance refers to the conduct of the taxpayer seeking to avoid paying taxes using for this maneuver or strategy permitted by the Act or by gaps of this. Circumvention is not strictly illegal since it is not breaking any laws, but by leveraging an interpretation is sometimes rigged or capricious, a situation that is permitted by law or with empty ambiguous.

Avoidance, however, refers to the maneuvers used by taxpayers to avoid paying taxes for it violated the law. In plain and simple tax evasion is not satisfied with the law, which undoubtedly is illegal (Leonard, 1996, Pp. 601).

It can be considered tax avoidance, for example when a trader for failing a common system , divides its business into two parts, so that one is out to stop him and the other hand on behalf of his wife or other family member. In this case is to avoid being responsible for the common, but is done by completely legal forms, so that if the investigating Dian will not find anything illegal, not only intended to collect and pay the VAT , which while it may be socially reprehensible, not illegal and therefore, it is not punishable.

Is evasion however, when the same trader decides not check their sales not to exceed the caps belong the simplified scheme , or if he is common, not charge VAT.

Note that in both cases, the ultimate intention is not to charge VAT, avoid paying VAT, but in the first instance is done through legal and therefore not punishable, whereas in the second example, is being openly law [the obligation to bill], which is called avoidance.

UK law provides many opportunities to "make it quite" paying taxes legally, and it is known as tax avoidance (Hite, 2006, Pp. 249). But when the law no possible decrease or avoid payment of tax and this is not paid, we are facing a tax evasion.

A third figure called tax planning. Tax planning refers to planning that makes the taxpayer to take advantage of tax benefits explicitly covered by the law. It is not the fall and look for gaps in the law, but to take advantage of the benefits it has provided. An example might be to invest in economic sectors where rents are ...
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