`

Tax Evasion vs. Tax Avoidance

the thin legal line which separates a crime from a

legitimate manipulation of the law

Marlon Gregory, LLB

 CONTENT

Topic Page

Abstract 2

Introduction 3

Defining Tax Evasion, Tax Avoidance 3

Importance of Paying Tax 6

Who is subject to tax 7

Highlighting the problem in Jamaica 9

Escaping the tax net: The ability of the revenue to enforce compliance 11

Interpretation and Manipulation of Tax Law 14

Ramsay principle 16

Agassi Tax Rule 17

Tax avoidance: The skill of favourable interpretation 24

Anti-avoidance 25

The Legal Line: Exposing the shams, Pointing out the evaders 26

Labeling: Media and Policy makers contribute to the uncertainty 30

Conclusion 32

Reference 33

Appendix 36

M. Gregory 1
 ABSTRACT

The paper explores and seeks to clarify a number of key issues relating to tax in Jamaica. The

main research question is to determine where to draw a clear line between the legitimate

avoidance of tax and the illegal evasion of tax liability. At the end of this paper the reader will be

able to ascertain the different methods of tax avoidance versus those of tax evasion and what is

the fundamental basis of the difference between the two approaches. There will also be a brief

overview of the way in which society views the revenue department and what they understand

the importance of paying tax to be. It is obvious that people do not like to pay over their hard

earned money to the government but this research will also seek to find out whether the approach

would be different if they understood the importance of tax. The final part of this paper will seek

to analyze the ability of the Revenue to enforce compliance and the effect this has on tax

planning.

The focus jurisdiction for this research is Jamaica but any international law or regulations that

may influence revenue within Jamaica is also considered. The final result should tell where the

line is to be, why the line is crossed, and the extent to which these concepts are understood by

taxpayers.

M. Gregory 2
Introduction

The idea of paying less tax than one would be initially liable to pay and the idea of paying no tax

at all is very attractive for almost every citizen of any country irrespective of his or her economic

standing. Tax collection is very important for the government of any country as it accounts for a

large part of its budgeted revenue. Both tax evasion and tax avoidance result in a serious loss of

revenue for any country and have a negative impact on the delivery of services. Therefore, when

individuals evade or avoid tax it has a negative impact on the quality of the services that a

government may be able to provide. Although this is a societal issue, the individual liable to pay

tax will be more concerned with the retention of as much of their income as possible.

The research will explore and seek to clarify a number of key issues relating to tax in Jamaica.

The main research question is to determine where to draw a clear line between the legitimate

avoidance of tax and the illegal evasion of tax liability. At the end of this paper the reader will be

able to ascertain the different methods of tax avoidance versus those of tax evasion and what is

the fundamental basis of the difference between the two approaches. There will also be a brief

overview of the way in which society views the revenue department and what they understand

the importance of paying tax to be. It is obvious that people do not like to pay over their hard

earned money to the government but this research will also seek to find out whether the approach

would be different if they understood the importance of tax. Finally, this research will also seek

to evaluate the general ability of the Revenue to enforce compliance.

Defining Tax Avoidance and Tax Evasion

Of all the various taxes within the Jamaica jurisdiction, the focus will be on Income Tax.

According to the Tax Administration of Jamaica (TAJ), income tax is tax on income including

M. Gregory 3
emoluments such as salaries, fees, wages, provisions or payments in respect of living or other

accommodation, entertainment, utilities, domestic or other services, benefits, perquisites and

facilities, all sums paid to any person by an employer in respect of expenses whether re-

reimbursable, all annuities, pensions, superannuation and allowance.1 Although this tax seems to

capture all persons who earn an income, there are persons who will attempt to not pay as much

as they are liable to, whether via legal or illegal means.

The first method of lowering tax liability is tax avoidance. Also referred to as tax planning, tax

avoidance evaluates a variety of options to reduce or eliminate your tax liability so that you reap

the largest tax benefit. It is clever and most importantly, it is legal.

On the other hand, tax evasion is an attempt to reduce or eliminate your tax liability by deceit,

trick, or concealment. Tax evasion is a crime and the fact that these criminals are hiding in plain

sight is little comfort.

For example, there are some doctors who operate on a cash-only basis. Also, one just has

to walk through downtown Kingston, or any major town for that matter, and do a quick

survey of those cash-only businesses. The result will be frightening and, if only one could

get inside to carry out audits, we might not be surprised to find that the taxman has been

shafted through devious accounting practices2.

The basic distinction between these two practices is that in essence one is legitimate and the

other is illegal and criminal. The right of a taxpayer to tax plan is enunciated in the well-known

1
www.jamaicatax-online.gov.jm
2
No Mercy for Tax Cheats, The Gleaner (July 28, 2014)

M. Gregory 4
case of IRC v Duke of Westminster3. In this case Lord Tomlin said, Every man is entitled, if

he can to order his affairs so that the tax attaching under the appropriate Act is less than it

otherwise would be. If he succeeds in ordering them so as to secure this result.he cannot be

compelled to pay an increased tax. He went further in IRC v Fishers Executors4 to state that the

authorities have always recognized that the taxpayer is entitled to arrange his affairs as to not

attract tax imposed by the Crown as long as he can do so in the lawhe can claim the advantage

of any expressed terms or ommissions that he can find in his favour in taxing statutes and when

he does this he neither comes under liabilty nor incurs blame. These two cases form the common

law basis of the rule establishing the legitimate and legal nature of effective tax planning.

However, a criticism of the reasoning of Lord Tomblin may be that tax avoiders do incur some

amount of blame although the nature of their activities are within the letter of the law as it is said

to be outside the spirit of the law.

In criticising those who avoid tax, the argument focuses on the view that those who can afford to

acquire the proper advise are ordering their affairs in such a way that shifts the burden from them

but places it on others. For many this is legal but far from moral or fair.

In an article Tax Avoidance and tax Evasion Explained and Exemplified Kumarasingam states

that many consultants even in this country do not understand the difference between tax

avoidance and tax evasion planning aspects that have been suggested by these consultants

often fall into the category of tax evasion.5 It is therefore evident that even in instances where

3
[1936] AC 1, 20
4
[1926] AC 395, 412
5
S. Kumarasingam, 'Tax Avoidance and Tax Evasion Explained and Exemplified'

M. Gregory 5
there is no fraudulent intent or intent to be deceitful, persons set out to plan but the blurred line is

crossed and they are classified as criminals. Denis Haley, a former British Chancellor, once said,

the difference between tax avoidance and tax evasion is the thickness of a prison wall. The

prospects of utilizing both methods are, either getting a tax bonus or being prosecuted for a

criminal act, and this makes a clear distinction very important.

Importance of paying tax

Essentially the government of any jurisdiction needs tax so they may be able to provide public

goods and services. Theoretically, tax collection is the most efficient way of shifting money from

private individuals to the government.

It is often said that people will be more willing to perform a task if they know the true value of

their contribution to the overall achievement of a specific goal or objective. With this philosophy

in mind the questions of whether or not taxpayers know the real purpose they pay tax and

whether or not taxpayers would be more compliant if they knew the real purpose of their tax

payment, are both quite relevant. At the 2011 discussion on tax reform and the economy hosted

by Scotia Investments the president of the Private Sector Organization of Jamaica (PSOJ),

Joseph Matalon, made a call for the government of Jamaica to school Jamaicans on the

importance of paying tax. Matalon went on to say, "When somebody is faced with a new

measure that they have not heard of before, or its policy imperatives, it's very easy to see why

people resist so strongly,"6

6
H Campbell, 'School Jamaicans on importance of paying taxes' [2015]

M. Gregory 6
Based on the findings of this research and specifically the interview7 that captured

representations from university staff, business owners, and government workers, the purpose or

the use of tax is unclear to most taxpayers. Over 75% of respondents stated that they did not

bother to concern themselves with the purpose for paying taxes, suggesting also that they were

not interested since it is mandatory. In Jamaica, the most identifiable taxes are income tax and

General Consumption Tax (GCT). However, although most persons are indeed interested in

finding out exactly what their money is eventually going towards, they still are not in favour of

paying taxes as they believe the government can get a large sum from other sources. Specific

mention was made to large companies and top business executives.

In general, despite being burdened with billions in new taxes yearly, the quality of service paid

for with tax dollars have not been at the level where Jamaicans would feel comfortable. The vast

majority of our roads are in a deplorable condition; the police force has been far from clinical

and is riddled with corruption; the wheels of justice turn at the pace of a full stop; the education

system has failed the majority of our people; and our health-care service has been on life

support.8 There is an identifiable need for the revenue department to inform taxpayers on the

importance of paying tax and on a wider scale the level of public service would need to increase

if there is to be even a slim chance of true appreciation of tax payment in Jamaica.

Who is subject to tax?

In order to determine who is liable to pay income tax the first document to be explored is the

relevant tax legislation. In Jamaica, this is the Income Tax Act (ITA) and the charging section is

7
See Appendix 1
8
http://jamaica-gleaner.com/gleaner/20120611/lead/lead7.html

M. Gregory 7
section 5. Income tax shall be payable by every person at the rate or rates specified hereafter for

each year of assessment in respect of all income, profits or gains. 9 This is an annual tax and the

extent of the liability of every person is based upon residence status. Whether a person is resident

or ordinary resident thus becomes a very important criterion in determining who is subject to

income tax.

The general view is that a person who is a resident of Jamaica for income tax purposes, is

liable to tax on his income wherever it arises. However, determining who is liable faces a

problem here, as the ITA does not define the term residence although it is such a core part of

determining who is chargeable. If section 29 is explored it does provide some direction. It would

appear that a resident is perceived to be any person who is in the island for at least six months in

a year of assessment. Income tax is an annual tax and is payable based on annual periods called

years of assessment. In Jamaica the year of assessment coincides with the calendar year.

Residence is an important concept in tax law as it is core to determining the sources of income

that fall to be assessed. Section 27 of the ITA states that persons not domiciled in the island or

Commonwealth citizens not ordinarily resident shall only be chargeable for income from sources

outside the island if said income is received in the island.10 Residents who leave the island

occasionally shall not be charged any differently as long as they do not set up permanent

residence in a foreign jurisdiction. It is important to note the question of whether someone is a

Jamaican resident is a question of fact and degree that will be evaluated in a given case.

9
Income Tax Act of Jamaica 2009 s 5(1)
10
Income Tax Act of Jamaica 2009 s 27(1)

M. Gregory 8
The income of companies as well as persons is also subject to income. This is determined by

deducting all non-capital disbursement and expenses wholly and exclusively incurred in

acquiring the income from all taxable income brought into charge. 11

Highlighting the problem in Jamaica

Low tax compliance is not a theoretical problem. Tax evasion in Jamaica is not one of the more

highlighted issues and this is largely based on perspective, as the governments ability to in

effect take money from regular Jamaicans would not be a major concern for the regular citizen. It

may be a legitimate view that both tax avoidance and tax evasion are morally wrong and in most

instances are opposed to the spirit of the tax legislation, however, tax avoidance is completely

legal.

According to experts at PricewaterhouseCoopers12 Jamaica, based on research done in the last

three years, the pool of taxpayers is small compared to the potential numbers that should be

contributing to the treasury. Based on the statistics collected by the company, of over 60, 000

companies less than 4000 are being compliant.

"We make assumptions about where the burden of taxes in the country lies. It is believed

that the PAYE worker bears the burden but it's also only certain workers who are

bearing the burden - it's not all employed persons, said Denning13. We have a labour

force in Jamaica of about 1.3 million. Of that, less than 330,000 are actually in the

PAYE net as being registered. Of that 330,000, over 120,000 are actually being reported

11
PKF International LimitedJamaica Tax Guide 2013
12
PwC ranks as one of the most prestigious professional services firm in Jamaica. The firm offers the full suite of
business services including Assurance (Audit), Business Advisory, Taxation, and Corporate Secretarial services.
13
Brian Denning is a tax expert and partner at PricewaterhouseCoopers Jamaica.

M. Gregory 9
 as being below the income tax threshold. So when you look at the numbers, just about

200,000 in the entire country contribute." Denning added: "If you think thats bad, when

you go to the self employed its a complete disaster. Of about 25,000 registered, a lot less

pay taxes.

According to the interviews14, the closest that persons feel to issues relating to tax compliance is

when famous individuals, locally and internationally, are identified as culprits. Amongst these

individuals are popular entertainers Beenie Man (Moses Davies), Bounty Killer (Rodney Price),

and Elephant Man (O'Neil Bryan). There have been embarrassing stories where the Tax

Administration of Jamaica (TAJ) has seized the assets of these entertainers. In 2007, it was

alleged that Beenie Man had neglected to comply with his tax charges and caused him to have a

balance amounting to almost $50,000,000. But even in such instances the majority of the

working class had sympathy on the entertainer and was not insistent on the collection of the

outstanding amounts. Mr Bryan explained that this incident occurred after he had split with his

manager who took care of filing his taxes but that he has now hired an attorney to handle these

affairs. Highlighting the new attorney brings the discussion to another point; the point of dealing

with tax advisers and the role they play.

In addition to entertainers other top professionals across the island are guilty of tax evasion.

Well-known ophthalmologist, Dr Thomas Lee was charged in 2014 by the Revenue Protection

Division. He is one of the countries top eye specialists and was accused of cheating the public

revenue of more than twenty one million.15

14
See Appendix 1
15
RJR News online, Ophthalmologist charged with tax evasion and granted bail (Dec 18, 2014)

M. Gregory 10
The Ministry of Finance and Planning has admitted that tax revenue targets have not been

achieved in the last seven years.

It has circulated as a claim that errant tax advisers are a core part of any issue concerning tax

evasion or planning. In some instances, tax advisers may intentionally guide clients to evade

taxes and in another cases advisers will cross the line unintentionally due to oversight or

negligence. In April 2008, he was sentenced to three years in prison for failing to file income tax

returns. The prosecutors contended that Snipes had failed to pay more than US$15 million in

taxes. He was acquitted of the more serious felony because the jury accepted that errant tax

advisers had innocently misled him.16 Errant advisers definitely contribute to tax evasion cases

but whether or not they are at the core will have to be determined after thorough analysis of case

law and recent claims.

Escaping the tax net: The ability of the revenue to enforce compliance

As we look deeper into the issue of tax avoidance and evasion in the Jamaican jurisdiction and

its causes, the general ability of the revenue to enforce compliance must be analysed. Tax

evasion, is sometimes equated to tax delinquency, but whatever concept is used it is a fact that it

is a problem that both businesses and individuals face. The Tax Collection Act17 and the Income

Tax Act work in tandem to enforce outlined requirements and enforce penalties to decrease the

16
The Gleaner, Tax Evasion Or Avoidance? (January 4, 2010)
17
[2001]

M. Gregory 11
level of tax delinquency present in Jamaica. Although the Acts contain various mechanisms to

help with tax compliance, enforcement and implementation may still be its main problems.

The various measures and remedies provided for under the Tax Collection Act may be enforced

by tax authorities that in some circumstances, as provided by the Act, may exercise without

reference to the courts or any other authority. Under a section entitled Enforcement of Taxes in

the Act, tax authorities are given the power to distrain goods and chattels of the delinquent

taxpayers. The taxpayer may redeem the distrained goods and chattels within ten days by paying

the taxes owed, a five per cent commission, and all costs associated with the proceedings.

However, if the items are not redeemed then they may be sold by the commissioner to recover

the outstanding amounts owed in taxes.18 An example of such enforcement was the seizure of,

popular Jamaican entertainer, Bounty Killas Range Rover and high-end land cruiser in 2010.

The vehicles were seized because it was alleged that the entertainer owed millions of dollars in

taxes.19

Even with such enforcement measures, some commentators still suggest that the government has

been unable to effectively enforce tax compliance, and the statistics are reflective of this

suggestion. Dr the Hon. Peter Phillips recently disclosed some statistics of the delinquency that

the revenue is facing. The minister said, We have some 82,000 companies listed at the

Companies Office of Jamaica. Filing returns at the Companies Office are some 62,000

(companies). So, we assume that those are functioning. Only 18,500 are registered for corporate

18
Tax Collection Act 2001, s 23 & s 24
19
Tax Officials Seize Bounty Killas Vehicles, The Gleaner (August 27, 2010)

M. Gregory 12
income tax with the Tax AdministrationAmong large taxpayers, with sales of $1 billion or

more, 27 per cent dont file at all. When you look at companies where you have sales of $150

million or more, you have close to 56 per cent not filing.20 It is in this context that the

government seeks to put new enforcement mechanisms in place using new laws and amendments.

The House passed the most recent of these laws on July 23, 2014.

The two new amendments, passed in the House of Representatives are the Tax Collection

(Miscellaneous Provisions) Act21 and the Tax Penalties (Harmonization) Act22. The first Act

seeks to amend other tax laws to provide additional measures to facilitate the collection of taxes

from delinquents and evaders. It is important to note that the main objective of the Acts is to

substantially decrease the amount of tax evaders and therefore increase the amounts collected by

the revenue. The new amendment to the Tax Collection Act sees the commissioner being treated

as a judgment creditor which is the name given to a party that wins a monetary award in a

lawsuit until the award is paid. This is because the commissioner is now allowed to issue a

certificate of the amount of taxes owed, which may be registered in the Supreme Court to give

the same effect of a judgment against the debtor, or as we prefer to call them, the tax evader. The

TCA23 includes new penalties for the late filing of returns under the provisions of the Income

Tax Act (section 71B), which includes a fine of five thousand dollars for each month, or a part of

the month, during which the delinquency, up to a maximum of one million dollars. The effect of

the stated provision is yet to be assessed. However, one may reasonably anticipate that a penalty

20
Jamaica Information Service (JIS), House Approves Bills to Improve Tax Collection
21
[2014]
22
[2014]
23
Tax Collection (Miscellaneous Provisions) Act [2014]

M. Gregory 13
that increases on a monthly basis and then becomes a part of the tax payable will be very

persuasive to the effect of earlier tax returns. Interest charges of 20% per annum until the

liability is paid, is another provision to bolster the objective of these new amendments; early tax

payment.

In addition to the TCA amendment, the TPA 24 also makes provisions for offences relating to

incorrect declaration, change of address, keeping proper records, refusal to deliver tax

information. For any of these offences the offender shall be liable on summary conviction in a

Resident Magistrates Court to a fine and or imprisonment. In essence personal, intellectual and

real properties such as financial instruments, music catalogues and land, as well as other kinds of

intangibles owned by tax debtors, could be quickly transferred to the state following the

amendments25. The outlined offences are generally those that that delinquents use to evade tax

whether for a set period of time or indefinitely. The possibility of court action often frightens

prospective tax offenders, especially businesses who do not want the bad publicity with their

customers and shareholders, and the possibility of a prison sentence is even more undesirable.

The new penalties and new powers conferred to deal with tax evasion marks an improvement in

the efforts of the revenue to increase compliance. If properly enforced, the above measures can

serve as effective deterrents for tax evasion and therefore increase tax compliance.

24
Tax Collection (Miscellaneous Provisions) Act [2014]
25
Draconian Law Shaw Seethes As Tax Bill Threatens Seizure Of Debtors Property, The Gleaner (July 24,
2014)

M. Gregory 14
Interpretation and manipulation of Tax Laws

The interpretation and subsequent manipulation of the provisions of tax laws is the primary

method of tax planning. It is a general proposition that tax avoidance is an attempt to interpret

tax legislation in a way that would allow the taxpayer to not pay tax, or pay less tax. As

mentioned earlier this is completely legal and the only question of wrong or right will concern

morality or the spirit of the law. Judicial precedent suggests that it is known that taxpayers are

not obliged to arrange their affairs so as to maximize the tax the government receives, taxpayers

are entitled to take lawful steps to minimize their taxes.26 However, although persons have the

intent to legitimately order their affairs to lower their tax liability they sometimes cross the thin

line and the result is tax evasion. It is on this premise that we must refute the proposition that the

major difference between tax avoidance and tax evasion is the intent that will be fraudulent

intent in the case of tax evasion. Tax avoidance requires advance planning and will be based on

structuring transactions based on the provisions of the tax law.

Using the rules of interpretation to manipulate the law for the purposes of avoiding tax is not

operating within the spirit of the law but it is operating within the letter. The Ramsay doctrine

illustrates this point. This is a doctrine that developed as an interpretation rule that can co-exist

alongside general anti-avoidance provisions.

This general principle was pronounced in The Carreras Case27. The case surrounded a

transaction of shares between Carreras ltd and a Trinidadian company. Carreras was the largest

manufacturer of tobacco products in Jamaica but was also involved in the manufacture of

26
See IRC v Fishers Executors [1926] AC 395, 412; IRC v Duke of Westminister [1926] AC 395, 412
27
Carreras Group Limited v. Stamp Commissioner [2004] STC 1377

M. Gregory 15
biscuits through another subsidiary, Jamaica Biscuit Company Limited. In 1999, Carreras

decided to leave the biscuit business and so arrived at an agreement with the Trinidadian

company to sell its shares. Carreras transferred its shares in Jamaica Biscuit to Caribbean Brands

in exchange for a debenture from Caribbean Brands, promising to pay the agreed consideration

(US$37.7Million) within fourteen days, but the Stamp Commissioner took the view that the

transaction was a sale and therefore and assessed it for transfer tax. Carreras appealed to the

Revenue court and Anderson J stated:

the exchange of shares for debenture was not a sham and fell within the four

corners of paragraph 6 (1) of the First Schedule. He held that the Act created a legal

fiction by which an exchange of shares for a debenture in these circumstances would be

deemed to be reorganization and therefore exempt from transfer tax.

However, Anderson Js decision was overturned on Appeal by the Court of Appeal and that

decision was upheld by the Privy Council on the basis of Ramsay28.

For avoidance and evasion the implications of Ramsay and the subsequent judicial jurisprudence

that developed are widespread. It is important to note that a single transaction constructed within

the provision of the law now may be held to be a sham if it is a part of a larger scheme where the

end result proves to be geared towards only the avoidance of tax. In most cases it is the intent of

taxpayers to create such a scheme and as mentioned before it may be due to a misguided

understanding of the legal rules that apply.

28
Ramsay Ltd v Inland Revenue Services [1981] 1 All ER 865

M. Gregory 16
In the view of the courts, the more simplistic interpretations acted as shackles on the judicial

process. Rules such as that which enunciated that there is no equity in taxation; if a person comes

within the letter of the law he must be taxed regardless of their hardship, and if a person is not

captured within the letter of the law then notwithstanding the spirit of the law, he must be free of

charge29. Such an interpretation is in the historical binding of tax law, when the distinction

between avoidance and evasion would have been simply ascertained. There was a shift after

Ramsay and such simple interpretations would no longer form the basis of judicial decisions

anymore. Lord Wilberforce stated that the scheme and purpose approach may be a helpful guide

for the interpretation of revenue statutes. The traditional approach of strict literal interpretation

would not be the basis of judicial decisions anymore and the court, in examining tax planning

schemes, would look at the entire transaction and give the statute a purposive construction to

determine the nature. Literalism effectively gave way to purposive interpretation, which is not

without its challenges especially in relation to the certainty of the law.

The Agassi tax rule represents precedent in tax law that has many implications for tax law,

especially the interpretation, in the Jamaican jurisdiction although the case is of the United

Kingdom. The significance of Agassi is not the final decision that was made but the means by

which it was decided; this has an implication, even if persuasive, for tax law across many

jurisdictions. In Agassi v Robinson30 a majority of the House of Lords found that payments under

two sponsorship contracts between a company owned and controlled by Mr Andre Agassi,

(Agassi Enterprises Inc.) and Nike Inc. and Head Sport AG were assessable under UK tax law.

29
Lord Cairns in Partington v Attorney General [1869] L.R.H.L 100
30
[2006] UKHL 23, [2006] STC 1056.

M. Gregory 17
This was so despite (i) none of the parties to the contracts was resident, nor domiciled, in the

United Kingdom and (ii) none of the payer companies conducted business, directly or indirectly,

through branches/agencies in the United Kingdom.

It is important to take note of the broad interpretation of sections 555 and 556 of the UK Income

and Corporation Taxes Act [1988]. The appeal raised the point of construction of these two

sections and the specific question was whether s 555 (2) should be given its literal effect so as to

exclude from its scope persons who neither reside nor carry on any trade in the United Kingdom.

It is a well known principle of statutory construction that it should generally be presumed that a

statute was not meant to have effect outside its jurisdiction, and this rule was relied on by the

respondent, Mr Agassi. The main question in this case was whether Agassis endorsement

earnings would be subject to tax in the UK and the House of Lords by a majority gave an

affirmative response.

The main task for the judges in this case was to figure out how to construct the relevant sections

of the UK Income and Corporation Taxes Act (ICTA)31, which provide that entertainers and

sportspersons not resident in the UK are subject to UK taxation in respect of profits or gains

arising from commercial activities carried out in the UK.32 Therefore, the interpretation of tax

statutes and inevitably the matter of legislative intent cast its shadow on the entirety of this case.

To use the territoriality principle (that UK statutes apply only to UK subjects or visiting

foreigners) to limit the clear language of section 555(2) was impermissible in Lord

Scotts view for three reasons. First, it could not have been Parliaments intention to

31
[1988]
32
UK Income and Corporation Taxes Act [1988]

M. Gregory 18
 render the payment of tax to all intents voluntary, which he argued would be a

consequence of the Respondents preferred interpretation. Secondly, what is relevant for

the purposes of section 555(2) is not the identity of the payer, but the nature of the

payment. As the Head/Nike payment was one in connection of a prescribed kind with

the relevant activity in terms of section 556(2), it was caught by the provision. Finally,

to interpret the Act such that where the payer is a foreign entity with no UK presence, no

tax liability arises, would be contrary to the whole point of sections 555 to 558 as

collecting from foreign sportspeople was one of the reasons why the new collection

regime was introduced under the 1998 Act. Any departure from this approach could

not, in his Lordships opinion, possibly be justified on the basis of a presumed

legislative intention.

So, of Lord Scotts three reasons, two can be regarded as looking for the intention of

parliament (the first and the third) with one based on the literal meaning of the statute.33

Indeed statutory interpretation had to be revisited in this case. This Agassi tax rule as a legal

precedent shows how quickly the line between tax avoidance and tax evasion may become

blurred as the utilisation of either method usually rests in the proper or the improper

interpretation of tax laws. Tax advisers, attorneys, and even the clients themselves had a legal

basis for not paying tax on endorsement earnings outside the UK but with the ruling of a single

case this legal basis became questionable and may even cease to exist. This is no a doubt a

difficult rule to understand and for many, like Usain Bolt, may seem unfair and brings the issue

of double taxation to the forefront.

33
[2006] BTR: No.6 SWEET & MAXWELL AND CONTRIBUTORS 2006

M. Gregory 19
This may have been a policy decision as it stands that UK tax should not be a matter which

external sportspeople opt in and out depending on their ability to arrange their funds elsewhere.

It is also unclear why the Lord Scott decided to pursue the route of determining the intent of

parliament since the plain meaning of the statutory language was clear. Within the rules of

statutory interpretation, reliance on the legislators intent is an option when there is ambiguity.

The rule in relation to legislative intent is one that may be easily misconstrued and manipulated

as some may move to decipher what the legislators were thinking when they put the law in place.

Since it is able to be manipulated many still do not accept the Agassi rule as one founded with

good reasoning especially as it relates to top athletes wishing to ply their trade in the UK.

The issue within the Agassi case surrounding tax avoidance or tax evasion is the interpretation of

the statute as applied by the court in said case. The case highlights the fact that although there are

different rules of interpretation and there is discretion on the part of the courts, some legitimate

tax advisers who are not reckless may have a serious problem. The core of this matter is on

interpretation and the different rules of interpretation that may apply thus turning legitimate

efforts at tax planning into tax evasion. Ascertaining chargeable income by making appropriate

expenditure deductions may be a more clear cut area but is still faced with its many challenges.

Misinterpretation, which may simply be a different interpretation from what the courts will use,

in effect means that advise for tax planning may quickly become bad advise that was used for the

evasion of tax. Clear lines that separated the legal method from the criminal act are becoming

blurred as the rules of interpretation swings tax cases.

M. Gregory 20
The interpretation of tax Acts extends to sections on deductibility, which is termed the avoidance

section of the tax law. The deduction of expenditure is a legitimate and recommended statutorily

allowed part of tax planning to decrease the amount of income that is taxable. However, claiming

for expenditure not incurred in the accounting period nor in the course of business remains one

of the most pervasive methods of tax evasion.

In Jamaica, deductions are dealt with under section 13 of the ITA. According to the Act,

chargeable income is the aggregate amount of income of any person from all sources remaining

after allowing the appropriate deductions and exemptions under this Act34. For the purposes of

this statute, income is a net tax concept. This means that to arrive at the taxable income then the

deductions that are permissible under this act must be made. Deductions are permitted on the

basis of the source from which the income is derived. These permitted sources are deductions

related to the earning of income from employment or office and business or trade.

Section 13 of the Act states that there shall be deducted all disbursements and expenses that is of

a revenue nature and not a capital nature. Expenditure that is of a revenue nature is deductible in

arriving at the chargeable income. In Pitt v Castle Hill Warehousing Ltd35 the presiding judge

established three elements that must be considered when determining whether expenditure is of a

revenue or capital nature. Firstly, what is the nature of the payment? If there is a single lump sum

paid once it is likely that this will be of a capital nature whilst if it is a recurring payment made

for different periods it will be considered of a revenue nature. Secondly, what is to be obtained

34
Income Tax Act, s2
35
[1974] 49 TC 638 (Ch D); [1974] 3 All E.R 146

M. Gregory 21
by the payment? One must consider whether it is some asset with lasting or enduring qualities, or

is it short-lived, or something that cannot be described as an asset. Again, it is the abuse of such

principles that see taxpayer-deducted expenditure that is of a capital nature, therefore crossing

the line from legitimate tax planning to evasion. However, based on the relative complex nature

of such tax rules it must be noted that crossing the legitimate line in these cases may not be

intentional but a consequence of misunderstanding such intricate distinctions.

The second principle states that the expenditure must be incurred wholly and exclusively in the

production of income. In other words, the activity for which the deduction is to be applied must

be the only purpose for which the expenditure was incurred. This is a common source of tax

evasion, where duality of purpose is established. Any expense that is incurred with a dual

purpose, whether or not it was intentional, will not qualify as a deductible under the law36. Some

clarity has been provided by case law on this principle and one of the chief cases in which the

concept was explored is Mallalieu v Drummond37.

The taxpayer, a lady barrister, set to deduct the cost of purchasing clothing which she

would only wear at court in accordance with the requirements of her job. The clothing

consisted of articles of clothing that could be used for everyday wear. The taxpayer

would not have purchased said clothing if it were not a professional requirement and she

would be barred from representing in court if she had been clothed otherwise. In the

House of Lords it was Held that the expenditure was not incurred wholly and exclusively

36
s 15 (1) (b) Income Tax Act states that no deduction shall be allowed in respect of any disbursements or expenses
not being money wholly and exclusively laid out or expended for the purpose of acquiring the income;
37
CA [1983]

M. Gregory 22
 for the purposes of her profession because although her primary objective or subjective

intention was to buy clothes for work, clothes were needed as a human being for warmth

and decency. The elements were inextricably linked.

This case was used to argue almost a total prohibition against a deduction for clothing

that is part of 'an everyday wardrobe' but they will allow a deduction for: Uniforms

(waiter's tails, a nurse's uniform), costumes (for film, stage, or TV ' including a TV

interviewer's suit, Actress's ball gown), and protective clothing.38

The Mallalieu case established that no deductions would be permissible under the Act for clothes

that form part of the everyday wardrobe. Expenditure that is incurred by the trader on ordinary

clothing during the course of work is not deductible. Another issue for income tax deduction is

whether the court costs of an employee in relation to the business is allowed under the provisions

of the Act. This was explored in McKnight v Sheppard39 in which the taxpayer was successful in

claiming for the court cost but not for the fines handed out by the court. The argument against

the taxpayer was that the expenditure served a dual purpose: the preservation of Sheppards

business, which is deductible and also the preservation of Sheppards personal reputation which

is not deductible expenditure. Sheppard successfully countered these arguments based on the fact

that he gave uncontested evidence that he did not care about his personal reputation and he only

contested the case to defend is profession. Therefore, the expenditure for the defence of the

litigation in this case was wholly and exclusively in the interest of the business.

38
'TAX FEATURE: Can clothing ever be an allowable expense against trading income?' (Accounting Web 2006)
39
[1999] 71TC419

M. Gregory 23
Tax avoidance: The skill of favourable Interpretation

If Tax Acts are interpreted properly, the rules and requirements may be manipulated to achieve

effective tax avoidance. Therefore, the principles of interpretation lies at the heart of tax

avoidance and whether these legitimate attempts will cross the line and be classified as evasion.

In essence, tax avoidance is an attempt to interpret tax legislation is such a way that would allow

less tax to be paid to the revenue.

Anti-avoidance provisions

Whilst it is legal to manipulate and interpret tax laws to the best of ones ability, it is important to

note the boundaries that will in effect that when a tax plan is illegal, not in the real of tax

avoidance and therefore becomes tax evasion. This is the object of the anti-avoidance section in

the ITA40. The general anti-avoidance provision is at section 16 which gives the Commissioner a

wide general discretionary power, where he is of the opinion that any transaction which reduces

or would reduce the amount of tax payable by any person is artificial or fictitious, or that full

effect has not been given to any disposition, the Commissioner may disregard any such

transaction or disposition, and the persons concerned shall be assessable accordingly41. The

prospect of ambiguity is a a major issue for this provision as there in no definition in the Act for

the words artificial nor fictitious which is the base of determing whether or not a transaction may

be classified as avoidance or evasion.

As a result of the ambiguity, the definition of these terms would be left to the courts to apply a

suitable meaning. The word artificial was defined as an adjective in general use capable of

40
Income Tax Act [2003]
41
s 16 (1), Income Tax Act [2003]

M. Gregory 24
bearing a variety of meanings according to the context whilst fictitious was defined as, a

transactionin which those who are ostensibly the parties to it, never intended for it to be carried

out.42 These definitions do not provide a sufficient amount of clarity on the matter and for the

purposes of legal certainty the definition of artificial may be ignored as the word is entirely open

to the interpretation of the courts. However, in the Douglas Henry Howe case43, Cons J, quoting

from the Seramco44 case indicated thatan artificial transaction was regarded to be of wider

importance and is one that has been carried out but is commercially unrealistic. These are

normally considered to have been artificial. The Act goes on to outline more specific

transactions that would not be considered legal.

Sections 16 goes on to talk about transfers to children and transfers in trust, section 17 speaks to

transactions with high or low considerstion, section 18 deals with transactions in securities,

section 19 deals with transfers to persons abroad, and section 20 speaks to the change of

residence. All the preceding sections give the courts the basis to classify various transactions as

fraudulent and declare them illegal.

The entire idea of an anti-avoidance section will confuse many taxpayers since in its purest sense

avoidance is legal and evasion is illegal but the laws are not anti-evasion laws but instead are

anti-avoidance. On the face of the issue it would seem that such a section, simply based on its

title is contrary to the rule laid down in IRC v Duke of Westminiter45. Tax planning which

42
Seramco Ltd Superannuation Fund Trustee v The Commissioner of Income Tax [1997] AC 287
43
CIR v Douglas Henry Howe 1 HKTC 936.
44
[1997] AC 287
45
[1936] AC 1

M. Gregory 25
involves fraud, deceit, and shams fall outside the ambit of the law and may be classified as tax

evasion. Tax avoidance is legal and the transactions mentioned throughout these sections are

illegal so a strong argument may be made that this is in fact an anti-evasion section. This

would provide some clarity on the nature of the two concepts.

The Legal Line: Exposing the shams, Pointing out the evaders

The attraction of the opportunity to pay less tax or no tax at all is one that has become so strong

that even individuals and corporations who began with legitimate tax planning will push the

boundaries of the law so much that legal transactions then become shams. Whether intentionally

or unintentionally these schemes transition from the realm of what is legal and legitimate to the

realm of illegality. Some transactions become a sham from abusing the boundaries of the law and

some were started with the intent of being a sham transaction or an attempt to evade tax.

The creation of elaborate tax schemes is within the legal right of the taxpayer but the creation of

a sham is a criminal activity and the taxpayer may be prosecuted if there is evidence of such a

scheme. This evidence may come from, and may in fact be, an arrangement that does not create

the legal rights and obligations that it purports to create. Such an arrangement is a sham and may

be ignored for the purposes of determining tax consequences. To ascertain the legal effect of

such arrangements one must look closely at the rights and obligations that are created by it and

not just the wording of the documentation46. The intent of the parties must also be analysed to

ascertain the true nature of the transaction. In the case of Snook v London & West Riding

46

M. Gregory 26
Investments Ltd47 Lord Diplock said all the parties hereto must have a common intention that the

acts or documents are not to create the legal rights and obligations that they give the appearance

of creating. No unexpressed intentions of a shammer affect the rights of a party whom he

deceived. It is the substance of the transaction and not the form that is important to the Revenue.

There are numerous taxpayers, tax advisers, and evaders who organize their affairs in accordance

with the letter of the law on paper and with a genuine belief that this will be sufficient for the

objective, to legally avoid tax. The revenue is interested in analysing the economic substance of

all transactions before it will determine the tax consequences. To properly understand these

elaborate plans it must first be noted that there are two types of shams. A sham in fact, where the

transaction never actually occurred and is merely a fabrication and, a sham in substance, where

the transaction actually occurs but lacks the substance that is claimed by the taxpayer.48 If the

transaction is contrary to objective economic realities and has no economic purpose except for

tax benefits then the alert must be sounded, as this is merely a sham. Taxpayers who cross the

line due to negligence or misinterpretation of the law usually utilize a sham in substance. A sham

in fact carries the full weight of illegality.

The Business Purpose and Economic Substance judicial doctrines are considered by the courts

when attempting to ascertain the true nature of a transaction. The business purpose test is often

times used as a weapon against tax avoidance schemes. The main purpose is to disregard

artificial schemes if they do not serve a legitimate business purpose. The issue addressed by

these two doctrines is whether the literal language of a statute or regulation should be overridden

47
[1967] 1 All ER 518, at 528
48
R.L. Sommers, Substance, Not Form, Important to IRS and the Courts

M. Gregory 27
because it leads to an inappropriate result. A transaction was held to be a sham for a lack of

business purpose in Leo v MNR49. In this case the fees paid by a company (Leon Distributors) to

a second company (Nor-Mar) which was owned by its only employee (Leon) in respect of

management services that Nor-Mar provided were held to be the income of Leon rather than

Nor-Mar, the company. According to the trial judge the absence of a bona fide (genuine)

business purpose for the interposition of Nor-Mar into the provision of Leons services to Leon

Distributors sufficient to declare that transaction as a sham. In contrast, the case of Stubart

Investments Ltd v The Queen50 stated that a transaction should not be disregarded for tax

purposes solely on the basis that it was entered into by a taxpayer without an independent or

bona fide business purpose. However, the formal validity of a transaction may be insufficient

where giving full effect to the transaction would defeat the object and spirit of an allowance or

benefit provision, or go contrary to a legislative intent to restrict the benefit of such provision to

rights that had accrued prior to the transaction, or where the relevant provisions of the Act relate

to an identified business function.

The preceding judicial doctrines bring about a level of uncertainty and blur for the line drawn

between the concept of legitimate tax avoidance and sham avoidance schemes that will

eventually become tax evasion. The simple distinction stated that tax avoidance is arranging

ones affairs within the law as best as possible to minimize or the amount of tax payable.

However, doctrines such as the Business Purpose Test seeks to override the letter of the law and

analyze the arrangement to find the business purpose, which if absent, the arrangement may be

held to be a sham and therefore not legitimate tax avoidance. This has been brought to the extent

49
76 DTC 6303, [1976] CTC 541
50
84 DTC 6305, [1984] CTC 294

M. Gregory 28
where some experts suggest that every tax statute should be interpreted as if it had in, This

provision applies only to transactions that have a business purpose apart from their tax

consequence.51 This is in fact a reasonable suggestion given the nature of the doctrines and their

applications but a criticism is that it exposes the taxpayer to uncertainty. The consequence of

getting these interpretations incorrectly would be the thickness of a prison wall, therefore, the

taxpayer should be able to read a statute and assume that that which is written is that which is

meant, and so may plan in accordance with its literal language. The line between the two

concepts is clear after analysis of the law and the judicial doctrines but is blurred and has a level

of uncertainty if the Tax Act is the only guidance on the matter. What shall be the fate of the

taxpayer who only has access to the legislation and plans his affair meticulously within the letter

of the law but has not considered doctrines such as the business purpose doctrine, the substance

versus form doctrine or the object and the spirit test? A man who has acted in accordance with

the letter of the law may now be a shammer who is guilty of evading taxes.

There is a proposition that the difference between tax avoidance and tax evasion is a fraudulent

intent. When taken in context with the rules of interpretation, judicial doctrines and errant tax

advisers, the truth within such a statement seems limited. The transformation of what was

intended to be a legitimate tax-planning scheme into tax evasion is proof that not all cases of tax

evasion will encompass an intent to defraud. Tax evasion, therefore, may be as a result a

legitimate tax scheme that has gone wrong or that is wrong in the purview of the court although

is was perceived to be legitimate by the taxpayer.

51
R.L. Sommers, Substance, Not Form, Important to IRS and the Courts (July 6, 1997)

M. Gregory 29
A taxpayer with a fraudulent intent is labelled in most countries and most times policy makers

also stigmatize tax avoiders. However, in the midst of this it must be made clear that there is no

room for morality in tax law. When a taxpayer falls within the provisions of the tax law and is

therefore liable to pay the revenue, the tax must be imposed without regard to the taxpayers

economical standing or other hardship.

Labeling: Media and Policy makers contribute to the uncertainty

The level of uncertainty surrounding the strict distinction between tax avoidance and evasion is

promulgated even further by the media and by extension the sources of some of the stories. The

terms are too often merged with the implication that both are on the same level. An article in the

Jamaica Gleaner recently reported, Dr Peter Phillips, the country's finance minister, said the

amendments, which were approved by the House of Representatives yesterday, one a response to

an "endemic culture of tax evasion and tax avoidance that has afflicted the country".52 One

cannot deny that unless you are familiar with the subject matter and its true meaning, such

statements cast avoidance and evasion in the sphere of illegal activities. This current approach of

policy makers and journalists was captured over half century ago by Lord Greene MR in the case

of Lord Howard de Walden v CIR53. He said, for years a battle of manoeuvre has been waged

between the Legislature and those who are minded to throw the burden of taxation off their own

shoulders on to those of their fellow subjects. In that battle the Legislature has often been beaten

by the skill, determination and resourcefulness of its opponents. It is this unsettling feeling that

52
Draconian Law Shaw Seethes As Tax Bill Threatens Seizure Of Debtors Property, The Gleaner (July 24,
2014)
53
[1942] 1 KB 389, 397

M. Gregory 30
lies at the base of the strong labelling of avoiders and as a consequence the misconception

amongst the populous that avoiders are criminals.

A headline that stated, Obama proposes outlawing offshore tax avoidance54 is more on point.

From this article the point came across that tax avoidance was in fact legal but was considered to

be wrong, unfair, and undesirable. Due to the negative impact that it has on the economy the

president wants to make some of these schemes criminal offences. This is the nature of tax

avoidance, legal and crafty but it in undesirable for policy makers. This is the clear message that

is desired so that tax avoiders will not be stigmatized as criminals.

Tax dodgers and tax delinquents are to of the descriptive names often seen in the media applying

to both evaders and avoiders. The articles go on to speak of methods that will be put in place to

claw back suspected billions of dollars in tax avoidance. Policy makers continue to label

avoiders whilst it must be noted that they are operating within the laws that they have the power

to amend. There is a section in the Income Tax Act of Jamaica and there is case law to defend

those who avoid tax. The implications of tax avoidance is far from desirable and citizens do have

the right to chastise those who are not paying what they are initially obligated to pay before they

set up complex tax planning schemes. However, tax avoiders do not deserve to be categorized as

criminals based on the lack of effort put into unambiguous reporting.

54
The Jamaica Gleaner, Obama proposes outlawing offshore tax avoidance

M. Gregory 31
Conclusion

Both the legislative and the judicial arms of government have tried to effectively deal with the

issue of tax avoidance and tax evasion. However, both have failed to produce a clear rule that is

predictable and offers certainty in distinguishing between the two concepts. Tax avoidance is

legal and recommended through the rules set out from the case law. The purposive interpretation

of tax laws has introduced a necessary tool for the revenue to combat schemes that are simply

established for avoiding tax but a negative impact is the unpredictability of the true meaning of

avoidance provisions. It may be posited that for countries like Jamaica with a very low tax

compliance rate, purposive interpretation and more decisions that may be made in the best

interest of policy may be good for the country. However, a balance must be created and the

taxpayer must have the opportunity to order his affairs in accordance with the law, to decrease

his initial liability without fear of being prosecuted in the courts due to the application of varying

rules of interpretation.

The initial differentiation between the concepts of avoidance and evasion is generally not enough

to properly analyse and ascertain the true consequences or benefits of tax planning. To achieve

the true distinction one must take into account the actual provisions of the law, the possible rules

of interpretation that the courts will apply, and relevant judicial doctrines that may be applicable.

Only after giving valid consideration to all these elements can one truly develop a good tax plan

that may not cross the boundary into the scope of illegal evasion. One cannot deny the stark

evidence that suggests that the earlier rules of interpretation that allowed the taxpayer and

adviser to have more certainty of the outcome of their schemes drew a much clearer line between

the two concepts.

M. Gregory 32
To truly achieve an understanding of the two concepts one cannot simply manoeuvre their way

around the tax legislation. One must consider manoeuvring their way around the law in general,

and this suggests, that rules of statutory interpretation and judicial doctrines are crucial to this

process. Rules of interpretation and doctrines are always evolving, with new cases being decided

all the time. The taxpayer must therefore beware of the possible interpretation that may be

applied in any given tax scheme. Separating avoidance from evasion is not simple task, but is an

achievable one, given the proper analysis of the law.

M. Gregory 33
 Reference

o S. Kumarasingam , 'Tax Avoidance and Tax Evasion Explained and Exemplified' (Ezine
Articles 2010) <http://ezinearticles.com/? Tax-Avoidance-and-Tax-Evasion-Explained-
and-Exemplified&id=3590555> accessed April 3, 2015
o N. Martin, 'TAX FEATURE: Can clothing ever be an allowable expense against trading
income?' (Accounting Web 2006) <http://www.accountingweb.co.uk/topic/business/tax-
feature-can-clothing-ever-be-allowable-expense-against-trading-income-nichola-ros>
accessed April 3, 2015
o Campbell H, 'School Jamaicans On Importance Of Paying Taxes, Says Matalon' The
Gleaner (2011) <http://jamaica-
gleaner.com/gleaner/20110508/business/business2.html> accessed 15 May 2015
o The Gleaner, 'Show Jamaicans The Benefits Of Paying Taxes' (2012) <http://jamaica-
gleaner.com/gleaner/20120611/lead/lead7.html> accessed 15 May 2015
o Income Tax Act of Jamaica 2009 s 5(1)
o Income Tax Act of Jamaica 2009 s 27(1)
o Pkf.com, 'Jamaica PKF Tax Guide' (2015) <http://www.pkf.com/publications/tax-
guides/jamaica-pkf-tax-guide> accessed 10 April 2015
o Rjrnewsonline.com, 'Ophthalmologist Charged With Tax Evasion Granted Bail | RJR
News - Jamaican News Online' (2014) <http://rjrnewsonline.com/local/ophthalmologist-
charged-with-tax-evasion-granted-bail> accessed 6 April 2015
o Mcgregor S, 'Tax Evasion Or Avoidance?' The Gleaner (2010) <http://jamaica-
gleaner.com/gleaner/20100104/flair/flair6.html> accessed 15 May 2015
o Tax Collection Act 2001
o Tax Collection Act 2001 s 23, 24
o The Gleaner, 'Tax Officials Seize Bounty Killa's Vehicles' (2010) <http://jamaica-
gleaner.com/power/22103> accessed 1 April 2015
o Linton L, 'House Begins Debate On Bills To Improve Tax Collection - Jamaica
Information Service' (Jamaica Information Service, 2014) <http://jis.gov.jm/house-
begins-debate-bills-improve-tax-collection/> accessed 15 May 2015
o Tax Penalties (Harmonization) Act 2014
o Tax Collection (Miscellaneous Provisions) Act 2014
o Ramsay Ltd v Inland Revenue Services [1981] 1 All ER 865

M. Gregory 34
 o Lord Cairns in Partington v Attorney General [1869] L.R.H.L 100
o Agassi v Robinson [2006] UKHL 23
o Agassi v Robinson [2006] STC 1056
o UK Income and Corporation Taxes Act 1988 s 555(2)
o [2006] BTR: No.6 SWEET & MAXWELL AND CONTRIBUTORS 2006
o Pitt v Castle Hill Warehousing Ltd [1974] 49 TC 638 (Ch D)
o Pitt v Castle Hill Warehousing Ltd [1974] 3 All E.R 146
o Mallalieu v Drummond CA [1983]
o McKnight v Sheppard [1999] 71TC419
o AccountingWEB, 'TAX FEATURE: Can Clothing Ever Be An Allowable Expense
Against Trading Income? By Nichola Ross Martin' (2006)
<http://www.accountingweb.co.uk/topic/business/tax-feature-can-clothing-ever-be-
allowable-expense-against-trading-income-nichola-ros> accessed 1 April 2015
o Income Tax Act 2003 s 16 (1)
o Seramco Ltd Superannuation Fund Trustee v The Commissioner of Income Tax [1997]
AC 287
o CIR v Douglas Henry Howe 1 HKTC 936.
o IRC v Duke of Westminiter [1936] AC 1
o Snook v London & West Riding Investments Ltd [1967] 1 All ER 518, at 528
o R.L. Sommers, Substance, Not Form, Important to IRS and the Courts
o Leo v MNR 76 DTC 6303, [1976] CTC 541
o Investments Ltd v The Queen 84 DTC 6305, [1984] CTC 294
o Luton D, ''Draconian Law' - Shaw Seethes As Tax Bill Threatens Seizure Of Debtors'
Property' The Gleaner (2014) <http://jamaica-
gleaner.com/gleaner/20140724/lead/lead1.html> accessed 10 April 2015
o Lord Howard de Walden v CIR [1942] 1 KB 389, 397
o The Gleaner, 'Obama Proposes Outlawing Offshore Tax Avoidance' (2009)
<http://jamaica-gleaner.com/power/8681> accessed 27 April 2015

M. Gregory 35
 Appendix 1

Interview Questions

1. As you understand it, what does the government do with the taxes it collects?

a. Do you think it is necessary to pay taxes? Why?

2. Do you know what the general figures or even the general status of tax compliance in

Jamaica is?

3. What are the different types of taxes that you know of for Jamaicans?

4. Would you be interested in finding out exactly what your tax is going towards?

5. If, you found out that the taxes you pay will form a big part of the governments budget,

would you be more inclined to pay?

6. If you were put in an influential position in the government, where would you try to get

the bulk of which you need?

M. Gregory 36