Whats the different between tax evasion and tax avoidance?
The first is illegal and is almost certain to result in stiff financial penalties and in the most serious cases a prison sentence. The second relates to legitimate steps you can take to minimise the tax you pay. On the simplest level this may be sheltering money in a tax-free individual savings account (ISA) rather than paying tax on the interest paid on a standard saving account. In some cases offshore investments can be sensibly used to reduce tax bills, particularly for higher rate taxpayers who may not cash in an investment until they are a basic rate taxpayer. They are also useful for those who work overseas and may be non-resident for a few years. Q: I have failed to declare an offshore account. What should I do now? A: By far the safest option is to be as candid as you can with the taxman. A spokesman for HMRC said that in many cases the fact that a person has voluntarily come forward could reduce any penalty by as much as 40pc. This still means that you will have to pay all tax
