Tax evasion and avoidance
typologies
Jeffrey Simser
Civil Remedies for Illicit Activities Office, Ministry of the Attorney General,
Toronto, Canada
Abstract
Purpose – The purpose of this paper is to explore tax evasion and avoidance typologies with a view
to understanding how they work and the implications for those who handle the wealth of others.
Design/methodology/approach – American, Canadian and UK cases of tax avoidance and tax
evasion are studied.
Findings – Structuring transactions to avoid or minimize taxes is highly complex, and thus, fraught
with risk, particularly for advisors.
Research limitations/implications – Commercial and taxation law in a globalized economy is an
ever-changing matter.
Practical implications – There is an enormous potential for reputational risk which can bear
significant consequences for the unwary financial advisor. Money launderers can hide their assets
applying methods similar to those used to evade or avoid taxes.
Originality/value – Thousands and thousands of pages documenting tax evasion and avoidance
cases have been distilled into an overview paper.
Keywords Taxation, Tax planning, Money laundering, Criminal forfeiture, Assets
Paper type Research paper
This paper has been written for a session on the implications of fiscal crime for those
who handle other people’s wealth, held during the 25th International Symposium on
Economic Crime at the University of Cambridge on 6 September 2007. Fiscal crime has
an enormous impact on society. In the USA, the gap between taxes due and taxes paid is
estimated at US$310-$350 billion (Beale, 2006). The USA could be losing $30-$70 billion
to tax havens; recent clampdowns on evasion in Ireland resulted in the collection of
e900 million from residents using the Channel Islands; a UK clampdown was estimated
to recover £1.9 billion (Owens, 2006). A recent UK report on organised crime suggested
that criminal assets available for seizure across a variety of untaxed criminal sources
amounted to £2 billion with another £3.3 billion sent offshore (Home Office Organised
Crime, 2007). Taxation is complex and navigating the tax system requires the advice of
skilled lawyers, accountants and other advisors. Those advisors face a dilemma: tax
evasion is unacceptable; tax avoidance is perfectly acceptable. Where is the line between
the two? This paper examines transactional typologies with a view to exploring those
boundaries and their implications for those who handle other people’s wealth.
Standards and rules
Traditionally, the tax system is thought to consist of a series of rules, whereby a
taxpayer may ex ante, order their affairs with certainty. Celebrated American jurist
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The views expressed in this paper are those of the author alone, and do not represent the views of
the Government of Ontario.
Tax evasion and
avoidance
typologies
123
Journal of Money Laundering Control
Vol. 11 No. 2, 2008
pp. 123-134
q Emerald Group Publishing Limited
1368-5201
DOI 10.1108/13685200810867456