No Safe Havens 2019: annex A - glossary
Updated 16 May 2019
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Definitions of key terms used throughout this document
Offshore tax
Offshore tax is tax payable to the UK Exchequer from income, gains or transfers arising from activities or assets situated in, or moved to, a territory outside the UK.
Tax evasion
Tax evasion is always illegal. It is when people or businesses deliberately do not declare or account for what they owe. It includes the hidden economy, which is when someone hides taxable activity from HMRC completely.
Tax avoidance
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. 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.
Tax planning
Tax planning involves using tax reliefs for the purpose for which they were intended – it is not tax avoidance. For example, claiming relief on capital investment, saving in a tax-exempt ISA or saving for retirement by contributing to a pension scheme are all legitimate forms of tax planning.
Tax non-compliance
Tax non-compliance is not getting your tax right the first time, for any reason. It includes evasion, avoidance and other behaviours, such as making careless errors or mistakes on your tax return.