Generally speaking, tax avoidance is the legal way of saving on tax payments. To use tax avoidance in that sense requires a lot of thinking and planning. While some governments impose anti-tax avoidance provisions in their tax laws, majority of sovereignties allow tax avoidance for the purpose of increased individual tax efficiency.
On the other hand, tax evasion is illegal because it involves the willful and deliberate use of extra-legal means to breach tax laws. It carries severe penalties and governments do not bend backwards to do any favor to tax evaders.
Tax avoidance should be properly consulted with tax planners. There will be instances when you save some on tax payments today because of an effective tax avoidance scheme but would be asked by authorities later to make additional payments because of some legal disagreements. There is a very thin line that separates a heavyweight tax avoidance and a lightweight tax evasion. Proactive steps must be taken to remain on the side of the law. That is why any option taken in tax avoidance should be discussed thoroughly with your tax planner so you can assess the implications and risks of your tax actions.
Things don’t always happen as planned. So make sure that you tax planner’s indemnity cover would be adequate to cover any tax deficit if the plan doesn’t work. It is important to clarify these things with your tax planner at the beginning of the contract.