Distinguishing evasion from a sham, avoidance and mitigation

The era of self-assessment and exchange of information coupled with criminal penalties for tax evasion requires most people to understand the fundamental tax planning concepts determining the scope of what is legally acceptable in the area of tax planning. Lord Templeman provided a concise summary of these concepts in the Privy Council case of Challenge Corporation Ltd. He said: "There are discernible distinctions between a transaction that is a sham, a transaction that effects the evasion of tax, a transaction that mitigates tax and a transaction that avoids tax." Transaction here is ...