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Tax Avoidance is here to stay

Author: Henry Ejdelbaum

Tags: Accountants

Forgive me for starting with a provocative statement but I do not believe that tax avoidance will disappear just because some politicians call it unacceptable and irresponsible. The reason why tax avoidance exists is simply because the tax system is so complex and so confusing that it creates loopholes. Loopholes are not created by clever accountants and their clients but they do exist and can be found, which only leads to them being be exploited.

Take the latest example of the Morrisons case where they went to court regarding the VAT treatment of disposable barbecues (no I’m not kidding!). In order to cut tax, Morrisons wanted to divide the product into a barbeque structure and the charcoal, as the charcoal attracts a lower VAT rate. The Tribunal disagreed with them and has managed to waste the resources of both sides!

Most people believe that accountants enjoy complex tax systems but I do not think this is fair. With complex rules and the resulting loopholes you also inherit the traps and pitfalls that accompany them. Accountants prefer a tax system which is simple, fair and consistent and which can be relied upon so that they can focus on the number crunching, allowing their clients to focus on operating and developing their businesses.