Contrary to popular opinion, the life of a Chartered Accountant is far from dull. The stories some people share with us are extraordinary. It’s almost like being a Priest except, for those accountants who are regulated (not all are but that’s a different story) we have a legal obligation, under Money Laundering Rules, to report any financially suspicious behaviour we encounter.
Don’t tell me your tax evasion scams
It never ceases to amaze me how willing people are to share their tax scams, dodges and schemes.
Sometimes it’s in an attempt to get us to ratify their scheme as being acceptable and above board although the “storyteller” ends up rather disgruntled, or worse, when I advise them that this is tax evasion; it’s illegal.
Often, it’s naivety of the rules and they fall back into line once I explain the legalities and the consequences of falling foul of them.
The worse stories are where we encounter the sheer arrogance of the offender thinking that either the tax laws shouldn’t apply to them or they’ve got one over the tax authorities with a rather ill-conceived tax dodge that will never work, is highly illegal and just plain daft.
It’s astounding just how many usually law-abiding citizens turn into potential criminals just to save a few quid in tax.
Tax Avoidance and Tax Evasion
Whilst tax avoidance is defined as the legal use of the tax laws to reduce the tax liability (we can debate that long and hard) tax evasion is most definitely illegal. It’s the illegal practice of not paying taxes.
Schemes, dodges and scams are often tax avoidance at best but likely to be tax evasion. It’s as simple as that. Even if they can be argued as being tax avoidance, they are likely to be an artificial arrangement of your tax affairs merely to avoid paying the right amount of tax. At some point in the future HMRC are likely to review the arrangement and may deem it to be evasion.
My role as a Chartered Accountant is to advise on the tax laws and likely position on any interpretation of the tax laws that someone wishes to take. I feel that my ethical duty is to ensure that the advice I give keeps the taxpayer the right side of the legal tax line at all times with the result that any challenge brought by HMRC, at any time, can be rigorously defended.
The ultimate decision on what a taxpayer (or tax avoider) wants to do is up to the taxpayer. Anyone can choose to ignore the advice I may offer. However, if the advice given is ignored I am unlikely to be the right accountant for you.
HMRC have your number
As much as I may criticise HMRC for their incompetence (only because we’re on the receiving end of it much of the time and have to sort out many an HMRC mess) they do, eventually, find many of the tax dodgers, collect the right amount of tax and impose the necessary penalties. They have many systems at their disposal to do this.
One day, the tax evasion may catch up with you; the brown envelope with the tax demand may drop onto your door mat or the knock may come at your door.
There’s a lot to be said for sleeping at night by keeping the right side of the tax laws and paying the right amount of tax.
I’ll do anything for Tax but I won’t do that
But regardless of what HMRC may do the fact of the matter is that I am a Chartered Accountant; a qualification that I am proud of and that I worked hard to get. I am very unlikely (take that as never!) going to put my career and livelihood in jeopardy by supporting any of these tax dodges.
I trained in the Profession. I work in the Profession. I am a Professional.