Tax evasion has a significant impact on the economy and has greatly contributed towards the £35bn UK tax gap between what should be collected in tax and what is actually paid for. As a result HMRC is stepping up its campaign against this criminal activity; prosecutions rose by 29 percent from 2012/13 to 2013/14 and again is aiming to rise by 50 percent next year 2014/2015.
Against this backdrop, the question of whether tax evasion is halal or haram is a sensitive issue and greatly impacts a person’s religious life.
Obviously, as a firm of chartered accountants, we believe that tax evasion is illegal and would never condone it. However, the disciplinary pages of accountancy magazines are often dominated by firms with Muslim sounding names and we often hear stories of Muslims who evade taxes. We have also had to turn potential clients away because they wanted us to “fudge the books”!
Therefore, we decided to look into the matter of whether tax evasion is halal or haram. In our personal opinion, its pretty clear cut, however we are not qualified to advise others on Islamic matters.
So we have prepared a report to discuss the key issues, which appear to be that tax evasion may be haram if:
1) a person should obey the laws of the land?
2) tax evasion may involve lying or fraud?
3) unpaid tax could create a debt?
Please read the report and make up your own mind about whether tax evasion is halal or haram.
If your accountant isn’t forthcoming about which accounting or tax practices are illegal or you have some doubts about a certain strategy, then please feel free to contact us and we will do our best to advise you on:
a) how to ensure compliance with UK tax and accounting regulations
b) how to minimise your tax liabilities in a legal manner