The difficulty of building comprehensive tax avoidance data

Abstract

Tax avoidance has become a prominent feature of contemporary media coverage. It shows that complex corporate structures and transactions are used at home and abroad to enable corporations and wealthy elites to avoid taxes. In this process they are aided by the private banking, legal, accounting, and investment industries. Due to secrecy and confidentiality attached in individual and corporate tax affairs, the amounts of tax revenues lost due to unlawful practices (often called tax evasion), competing interpretations of law (some call it tax avoidance) and a variety of other factors are hard to estimate, but competing models provide a glimpse. This chapter argues that it is difficult to reveal the full extent of tax revenues lost and identifies some of the reasons why this is so. It is difficult if not impossible, to build a comprehensive picture partly because tax avoiding transactions frequently give the appearance of normal transactions and partly because the limited staffing and financial capacity of HMRC makes thorough investigation and prosecution where necessary impossible in all cases.