VAT avoidance consultation document

Brown, John; McLaughlin, Tony
August 1993
Accountancy;Aug1993, Vol. 112 Issue 1200, p94
Trade Publication
This article presents information on a consultation document drafted by the Customs Department that provides guidance on its approach to value-added tax (VAT) avoidance in Great Britain in 1993. The document is intended to show the factors Customs consider when deciding to challenge an avoidance scheme and to provide examples of schemes that have been or may be countered, without providing a rigid definition of VAT avoidance. The consultation document explains how, under their statutory duty of care and management of the tax, Customs must challenge transactions where they perceive an attempt to undermine the law. The view of Customs is that large-scale VAT avoidance would reduce the government revenue in the market place. Moreover, the view of the Institute of Taxation is that tax avoidance is indicated by tax planning where arrangements are designed to avoid or reduce tax liability and exist purely for avoidance purposed rather than for any other commercial business purpose and which are recognized as outside the broad intention of the legislation. To counter tax avoidance, Customs can assess for VAT where they disagree with the interpretation of the law that has resulted in avoidance or where Customs see that the avoidance measure is permitted under the legislation, they can seek to have the legislation changed.


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