In current English, the word “loophole” is something not quite nice, implying possible exploitation, generally by large corporations or unscrupulous individuals. A way to get around the law while not actually breaking the law, it is based on an ambiguity, a flaw or omission in a set of rules or the text of a contract.
There are tax loopholes which, with the help of a good tax accountant or lawyer, can help the client avoid a sizeable tax liability. Politics and elections, criminal justice and divorce law, all have been manipulated by existent loopholes.
The definition is strictly one of this and the previous century. Prior to that a loophole was a physical entity : a hole in a wall.
First appearing in Middle English during the period of the 12th to the 15th Centuries, a loophole was originally a vertical slit in a wall, often the wall of a fortification such as the tower of a castle. Its purpose was to allow bowmen to discharge arrows at an enemy without exposing their bodies as targets to the enemy archers. It was also called an arrow-loop or a loop-window.
As the vertical slit presented a very narrow field, refinements were eventually made. The loophole was constructed with a horizontal slit as well as a vertical one. This cruciform opening gave a wider field but still sheltered the bowman. When gunpowder made its appearance in warfare, the cruciform opening was enlarged into a circle to further widen the target field. It was then called a gun-loop. Gun-loops were a feature of Scots architecture, persisting well into the 19th Century in revival architecture.
The evolution between a hole in the wall and tax evasion is obscure. Perhaps a closer look at the synonyms for “loophole” holds a clue. Some of these are aperture, opening, and outlet. Where there is an opening, there is also the possibility of escape. Today’s usage of loophole has a link to escape and evasion, which leads to avoidance and circumvention.
The Oxford Pocket Dictionary of Current English
A Dictionary of Architecture and Landscape Architecture
The Oxford American Writers Thesaurus