Defining Taxpayer Responsibility: In Support of a General Anti-Avoidance Principle

Abstract

This article examines tax avoidance in the context of regulatory and legal theory and developing ideas about corporate governance. Words such as "ethics" or "morality" are frequently called upon within the tax avoidance debate, whilst corporate directors argue that they have a "duty" to minimise taxation within the law. "Certainty" is given great weight and importance as an outcome, and this requirement is often thought to demand specific rules rather than a general anti-avoidance principle. This article concludes that the law should give more direction to taxpayers, especially company directors, on the balance of their duties. This cannot be left to morality but, it is argued here, can be best achieved by a legislative general anti-avoidance principle. It is not claimed that this would achieve certainty: rather that certainty is the wrong test of such a principle. Moreover, a legislative anti-avoidance principle would not, and would not be intended to, remove the need for judicial development, since judges will always have a role to play. Rather, a legislative general anti-avoidance principle would provide the overlay needed to give legitimacy to judicial development and offer a framework in which the uncertainty inherent in any system capable of tackling tax avoidance could be fairly managed.