1: Intro to Tax Flashcards
What are three sources of tax and practice?
- Tax legislation (via Finance Act)
- Case law
- HMRC (guidance only)
What are the 5 types of guidance that HMRC can give?
- Statements of practice
- their interpretation of law - Extra-statutory concessions
- given to certain tax payers to relax legislation - Internal guidance manuals
- produced for staff but shared widely - HMRC Website
- pdfs online for the public - HMRC press releases
- provide details of a specific tax issue in the year
What does the tax system encourage and discourage in terms of economic behaviour?
Encourages:
- individual savings habits - ISAs
- charitable donations - gift aid
- entrepreneurs by tax relief schemes
Discourages
- petrol and diesel cars
- alcohol and fags
Also directs behaviour on enviro:
- landfill tax
- climate change levy
- linking Co2 to taxation of cars
What are the 4 competing principles of taxation (under social justice)?
Direct/indirect principle
Progressive/regressive principle
Unit/value principle
Ability to pay/benefit principle
What are the 5 types of tax and who pays them?
Income Tax
- individuals
Capital Gains Tax
- individuals
Corporation Tax
- companies
NICs
- both
VAT
- both (if registered)
Employees can pay Income Tax and NICs via PAYE, the rest must be submitted via Tax Return
What is the TY and the FY?
TY: 6 Apr - 5 Apr
For individuals
FY: 1 Apr - 31 March
For corporation tax
Who does MTDfB current apply to?
To business only for VAT purposes
What are the 5 responsibilities of HMRC?
- Collecting and administering tax
- Paying and administering credits and benefits
- Collecting repayments of student loans
- Ensure adherence to minimum wage
- Protecting society from fraud and drugs
What are the two types of compliance checks?
Pre-return checks
Enquiries into returns already submitted
What are the dates for HMRC giving notice of compliance checks?
12 months - if on time
12 months and next quarter day - if late
What is the date for HMRC producing a determination?
Within 3 years of the statutory filing date
What is a discovery assessment?
An assessment raised by HMRC after the window for compliance checks, if they get new information about a tax payer’s affairs
What are the date limits for discovery assessments?
4 years if not deliberate/careless
6 years if careless
20 years if deliberate
What is the Payment Support Service?
Assists those who cannot pay the tax they owe before the deadline.
Might offer a Time to Pay arrangement (instalments). This will incur interest.
What are the conditions for direct recovery to be applicable?
- HMRC issues notices to the bank
- amount due must at least be £1,000
- time for the taxpayer to raise objection
- taxpayer left with £5,000
- taxpayer must not be vulnerable and must be aware
