The creativity inherent in creative compliance involves finding ways to

The creativity inherent in creative compliance

This preview shows page 239 - 241 out of 311 pages.

intended impact of law. The creativity inherent in creative compliance involves finding ways to accomplish compliance with the letter of the law while totally undermining the policy behind the words. It is therefore when compliance takes the
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230 Taxing Democracy form of creative compliance that it becomes, for those vested with the task of enforcing policy, a problem not a solution. Creative compliance devices abound in the area of tax, but are not confined to it. Far from it. Creative compliance will be found in any area of law in which those subject to it have the motivation and the resources (in terms of money and/or know-how) to resist legal control legally. Recognising this will help those concerned with tax to realise that creative compliance is not a tax issue but a much more general law issue, and a fundamental one at that. Recognising that the issue goes beyond tax avoidance to law avoidance means we can try to learn from experience in other areas of law, in such areas, for example, as that first cousin of tax avoidance, creative accounting. Indeed, creative accounting is pertinent to tax not only as a parallel area of creative compliance, but as potentially integral to tax computation. 2 In the analysis that follows I draw not only on my own research on tax avoidance in the United Kingdom (UK) 3 and in Australia, 4 but on joint research on creative accounting 5 to draw out the challenges posed for effective enforcement by creative compliance. Creative Compliance Two factors contribute to the practice of creative compliance. One significant factor is the nature and operation of law itself. The law-making process leads to lobbying and compromise, legislators cannot address every contingency that might arise, drafting is fallible. More fundamentally, it is in the nature of law that it is open to different interpretations, and that its meaning and application are arguable. Creative compliance, however, does not arise deterministically from the nature of law. It also requires a particular attitude to law, an attitude which, far from seeing law as an authoritative and legitimate policy to be implemented, sees it as a material to be worked on (McBarnet, 1984), to be tailored, regardless of the policy behind it, to one’s own or one’s client’s interests. And it requires active legal work. Law is open to alternative interpretations. Innovations in practice can leave law behind. But grey areas, alternative interpretations and innovative legal forms do not only arise ‘naturally’. Rather, they may be motivated precisely by the desire to outflank the law. Creative compliance involves careful scrutiny of law in order to seek out material for and actively construct alternative and innovative arguments and legal forms. Creative compliance involves seeking out: (a) gaps facilitating the ‘where does it say I can’t do that?’ argument; (b) the ex-files of law, expressing exemptions, exceptions, exclusions, with practices then restructured to fit within them; and (c) rules, the more prescriptive and rigid the definitions and thresholds
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  • Fall '16
  • tax authority, Australian Taxation Office, Tax Office, Compliance Model

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