I’ve never quite understood the difference myself, that was until I did a little bit of research!
Tax evasion is illegal. This is where a corporation or individual purposely hides income so as not to pay tax. Defrauding the Inland revenue is a criminal act if caught, and will result in heavy fines and a possible prison sentence. On the other hand, tax avoidance is quite legal. This is a means of structuring your finances in order to take advantage of existing tax law, which leaves you paying little or no tax at all.
Clear? Well not to me! As the government closes legal loopholes to prevent the very rich and very famous avoid paying tax, the act becomes one of evasion. There is a vast grey area between the two types of non-payment of tax, which is often tested in the courts, when a judge makes a ruling, often turning avoidance into evasion! So what is legal on a Monday becomes illegal on a Wednesday!
Political parties rely on regular, large political donations from very rich tax evaders/avoiders…individuals, companies, accountancy firms and hedge fund managers…in order to balance Party books and fights elections. If you squeeze donors too hard by closing their off-shore money boxes, political donations will inevitably dry up! You might say, ‘so what?’ I’ll tell you ‘so what!’ The taxpayer…you and I…may one day be forced to fund political parties, and I don’t like the sound of that!