REMARK: From 'The Advanced Course of Interpretation', this article refers to Test Three Reading Three, Page-331.

The gap between what companies might be expected to pay in tax and what they actually pay amounts to billions of pounds – on that much, everyone can agree. The surprising truth is that no-one can agree how many billions are missing, or even how to define “tax gap”. Estimates range from anything between 3bn pounds to nearly 14bn pounds, depending on who is doing the calculations, Even the people in charge of collecting the taxes – Her Majesty’s Revenue and Customers (HMRC) – admit they have only the vaguest idea of how many further billions of pounds they could be getting … and it took a freedom of information request before they would admit the extent of their lack of knowledge.

Any media organization or MP attempting to pursue the subject will find themselves hampered by the same difficulties faced by the tax collectors – secrecy and complexity. The Guardian's investigation, which we publish over the coming two weeks, is no different.

The difficulty starts with an inability of anyone to agree a definition of “tax avoidance”. It continues through the limited amount of information in the public domain. And it is further hampered by the extraordinary complexity of modern global corporates.

International companies based in the UK may have hundreds of subsidiary companies, which many use to take advantage of differing tax regimes as they move goods, services and intellectual property around the world, It is estimated that more than half of world trade consists of such movements (known as transfer-pricing) within corporations.

Companies are legally required publicly to declare these subsidiaries. But they generally tell shareholders of only the main subsidiaries. The Guardian's investigation found five major UK-based corporations which had ignored the requirements of the Companies Act failing to identify offshore subsidiaries. This is just one example of the atmosphere of secrecy and non-disclosure in Britain which has allowed tax avoidance to flourish. The result is that few outside of the lucrative industries of banking, accountancy and tax law have understood the scale of the capital flight that is now taking place.

British tax inspectors privately describe as formidable the mountain outsiders have to climb in order to comb through the accounts of international companies based in London, “The companies hold all the cards”, said one senior former tax inspector. “It's very difficult because you don't always know what you are looking for… You are confronted with delay, obstruction and a lot of whingeing from companies who complain about 'unreasonable requests'. Sometimes you are just piecing together a jigsaw.”

Another former senior tax inspector said: “One of the problem is the Revenue has is that the company doesn't have to disclose the amount of tax actually paid in any year and the accounts won't reveal the liability, Each company has its own method of accounting for tax: there's no uniform way of declaring it all.” For journalists trying to probe these murky waters, the problems are so substantial that few media organizations attempt it.

A trawl through the published accounts of even a single major group of companies can involve hunting around in the registers of several different countries, It takes a lot of time and a lot of money, Companies – with some far-sighted British exceptions – simply refuse to disclose any more than what appears in the published figures. The legal fiction that a public company is a “legal person”, entitled to total tax secrecy and even to “human rights”, makes it normally impossible for a journalist to penetrate the tax strategies of big business. HMRC refuse, for example, to identify the 12 major companies who used tax avoidance schemes to avoid paying any corporation tax whatever.

It is difficult to access experts to guide the media or MPs through this semantic jungle, The “Big Four” accountants and tax QCs who make a living out of tax avoidance, have no interest in helping outsiders understand their world. Few others have the necessary knowledge, and those that do, do not come cheap or may be conflicted, “Secrecy is the offshore world’s great protector,” writes William Brittan-Caitlin, London-based former Kroll investigator in his book, Offshore. “Government and states are generally at a loss to diagnose in detail what is really going on inside corporate internal markets. Corporations are extremely secretive about the special tax advantages these structures give them.”