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What is tax evasion? πŸ₯Έ

what is tax evasion

What is tax evasion?

Introduction πŸ‘‹

Tax evasion is where a a person or company avoids paying tax money that they owe to the government.

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It is against the law in most countries. If someone gets caught avoiding paying their taxes, they could be punished as a criminal and have to pay fines.

Why does tax evasion happen? πŸ€·β€β™€οΈ

Although tax evasion is not legal, it still happens.

There are several reasons why tax evasion might happen –

For example, if tax rates are high, people may evade taxes so that they can keep more of their money.

In other cases, people may evade tax by accident, where they may not report all of the income they have made because the tax forms aren’t clear.

Some tax evaders could have entered into a scheme thinking that it was legal to reduce their tax bill – but then get caught out.

Tax evasion vs tax avoidance – what’s the difference? πŸ₯ΈπŸƒβ€β™€οΈπŸ’¨

The biggest difference between tax evasion and tax avoidance is:

Tax evasion = usually illegal, hiding money from the government

Tax avoidance = usually legal, paying less tax but still following the government rules

Where do people get tax advice? πŸ‘©β€πŸ’ΌπŸ’¬

People often find specialist tax advisors or accountants to help them to pay less tax, but in a legal way.

You can also look at your government website to learn more about tax for your country!

If you’re in the UK, you can check out the tax section of the government website here.

Conclusion πŸ‘

So that’s it!

Here are our 4 main things to know about tax evasion:

  1. Tax evasion is where a person/company avoids paying tax money owed to the government.
  2. It is usually illegal.
  3. Tax evasion is different to tax avoidance – tax avoidance is usually legal.
  4. Specialist tax advisors/accountants can help give people advice around paying tax in a legal way.

Hopefully you’re feeling more confident about understanding tax evasion.

If you know any friends or family members who might benefit from learning about tax evasion, share this post with them!

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