ACCA Applied Knowledge · Business and Technology · Regulation and financial crime
Which of the following best describes tax evasion?
Tax evasion is the deliberate use of illegal means, such as hiding income or giving false information to the tax authority, to pay less tax than is legally owed. It differs from avoidance, which stays within the law, and from simple late payment.
- ADeliberately giving false information or hiding income to pay less tax than is legally dueCorrect
- BArranging affairs within the letter of the law to reduce the tax payable
- CPaying tax late because of a genuine cash flow problem
Explanation
Tax evasion is illegal: it involves deliberate dishonesty, such as concealing income or falsifying records, to reduce a tax liability. Option B describes tax avoidance, which uses legal means. Option C is late payment, which may attract penalties but is not necessarily evasion because there is no deliberate concealment.
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