Tax Avoidance or International Accounting Standards - Dissertation Example

Download file to see previous pages In principle, taxes are paid to promote social justice and assist the government and corporate sector to meet its objectives and needs. If an individual or business entity fails to pay taxes, they are liable to prosecution and this could result in fines or jail terms (Blankson, 2004: 3).

This implies that although failure or refusal to pay taxes could have serious consequences, there is some kind of loopholes that can be explored by corporate entities in order to pay fewer taxes. The ACCA identifies that everyone must arrange his affairs to pay fewer taxes and it is not even a patriotic duty to pay more taxes (2009). This means that it might be desirable to arrange one's affairs to pay the minimum tax possible.

James identifies that “tax avoidance involves the taxpayer using the tax rules to his best advantage to minimize his tax liability” (2009: 129). Hence, the practice of tax avoidance entails the examination of the tax rules to identify the best way of arranging one's affairs to pay the least possible taxes.

However, this theory seems to be in conflict with the normal view and spirit of taxation which is to promote social justice. It seems to be at odds with the right thing a responsible citizen should do. In other words, one would expect a responsible citizen to pay all taxes as and how they fall due.

1.1 Research Problem
In spite of the seemingly amoral view of paying less tax through tax avoidance, it is practiced all over the UK. It is said that the largest companies are the ones who hire the best tax lawyers and tax planners to cut down their taxes to the barest minimum (Sims, 2011). So in that case, is tax avoidance really legal or not?

Aside from that, how is tax avoidance carried out? What are the techniques and strong spots through which tax avoidance is carried out? In practice, what are the most dominant ways that are used by corporate entities to avoid taxes?

1.2 Aims and Objectives
This research aims to “undertake an inquiry into the concept of tax avoidance and an analysis of the techniques used and the main trends and activities that are used in carrying out tax avoidance”. In doing this the following objectives will be explored:
1. A critical review of the concept of tax avoidance and its relative position in the world of finance and business.
2. An examination of the main areas through which tax avoidance is carried out and the strategies used in carrying out tax avoidance.
3. Analysis of the role of stakeholders: shareholders, employees, and the public in the struggle for tax avoidance
4. A critical view of a moral approach to dealing with tax avoidance in the UK.

1.3 Research Design
The research would focus mainly on a critical literature review for various levels of analysis. In arriving at this end, the research would involve a thorough examination of secondary sources like textbooks, journals, and cases to ascertain the actual position of tax avoidance in the world of business.

The critical review of the literature will include an examination of the authoritative text in ascertaining the most popular trends and systems that are used in reducing taxes in the corporate sector. ...Download file to see next pages Read More