What is tax evasion?
Tax evasion usually refers to the deliberate dishonest non-payment of tax that is legally due by claiming to take advantage of non-existent loopholes in the law or attempting to conceal funds or misrepresenting receipts or expenses to HMRC.
Fundamentally, this means knowingly not declaring exactly how much taxable income or gains you’re receiving, for the purposes of reducing the amount of income tax you pay.
Whilst it can occur on an individual level, tax evasion also takes place at a more complex level by business owners as their affairs often provide greater scope to conceal or suppress reportable income or gains.
Tax avoidance as distinct from tax evasion often occurs due to human error. Poor record-keeping, failing to file a tax return on time and failing to register a new business are all examples of tax avoidance arising from mistakes, though you can still be prosecuted if HMRC suspects that it was deliberate and not an honest mistake.