In view of the BBC TV Panorama programmes relating to the so-called Paradise Papers, we felt it would be helpful at this point in time to highlight the major differences between tax avoidance and tax evasion.
Tax avoidance is the process of helping a tax payer reduce or minimize the amount of tax payable within the limitations defined by the law of the relevant jurisdiction or jurisdictions.
In actual fact, we don’t think that the word “avoidance” is the best way of describing this process. Instead, we prefer to use the term ”efficiency” which we feel offers a far more accurate description of the procedures we undertake to help clients reduce their tax liabilities.
Conversely, tax evasion is completely wrong. This is the practice of evading tax by illegal methods, such as failure to disclose information to the tax authorities or deliberately misrepresenting or under reporting actual income earned. Tax evasion is a crime which can result in a hefty fine or, in the worst cases, imprisonment.
Meanwhile, tax efficiency or tax planning (there’s another equally relevant description) involves undertaking a series of sensible, responsible and lawful measures to help reduce any given tax liability, in order to legitimately protect the wealth and estate of the individual or corporate entity in question. Nothing more, nothing less.
At Sterling, we remain committed, at all times, to best practice on behalf of our worldwide clientele and to assist them with the effective management of their wealth and assets, including via the implementation of appropriate tax efficient methods.
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