A tax haven is a place that enables individuals to hide assets to avoid paying more, or any, tax. These ‘havens’ are usually found in a country that maintains a level of financial secrecy.
Tax evasion is classed as a serious fraud offence.
How much does tax fraud cost the UK?
Each year, tax fraud and evasion costs the UK government around £16 billion every year. To put this into perspective, that’s around half of the £30 billion ‘tax gap’ that’s estimated to be the difference between what’s expected to be paid in tax and what’s actually paid.
In the 2013/2014 tax year alone, around £4.6 billion was paid to tax claimants in the UK, either through genuine mistakes or through outright tax fraud.
The British Tax Justice Network reported that between £15 trillion and £24 trillion is fraudulently protected from taxes in tax havens across the globe.
What effect does tax avoidance have on the public?
One of the most important reasons that we pay tax is to fund services like the NHS and local councils. If people aren’t paying the right amount of tax, this means that essential services like these end up losing out on funds.
If these services don’t get the funds they need, this means that the amount of tax the public has to pay is increased, making it even more difficult for the poorer part of the population to make ends meet.
What could Brexit mean for tax havens?
For over 40 years, Europe has been the largest influence on the UK tax system, so the UK leaving the EU could spell changes for individuals using tax havens.
The UK is already in the process of changing its corporate tax rate to just 17 percent and could eventually be able to offer foreign investors one-off tax deals – something that’s currently prohibited by EU law.Posted on: Wed, 14 September 2016