13. Tax admin. for individuals Flashcards
When do tax returns have to be filed? What is this dependent on?
- 31st October by paper
- 31st January online.
When does an individual need to have informed HMRC they need a self-assessment by?
05th October after the tax year
What are the deadlines for amending tax returns? What is this dependent on?
- By HMRC: 9 months of actual filing date
- By taxpayer: 12 months from due filing date (31st Jan + 12 m)
What are the penalties for submitting a tax return late?
Immediately: £100
More than 3 months: £10 a day (max. 90 days)
More than 6 months: 5% of tax due (or £300 if greater)
More than 12 months:
- Accidentally: 5% of tax due (or £300 if greater)
- Deliberate but no concealment: 70% of tax due (“ “)
- Deliberate with concealment: 100% of tax due (“ “)
These charges are cumulative.
What is a tax determination?
What are its effects?
HMRC estimation of tax due if tax return not filed on time.
Penalties based off this an HMRC can file this within 3 years of statutory filing date.
What records must a company keep? (3)
What records must other taxpayers keep? (2)
For how long?
What is the fine if not done?
Company: - all receipts and expenses - all goods purchased and sold - all relevant supporting documents Held for 6 years
Individual:
- all income received (P60, P11D, dividend vouchers)
- relevant bank statements
Held for 1 year
Penalty of £3000
Payments on account…
are paid on what income?
are due on what dates? (2)
are not paid when? (2)
Paid on income tax and class 4 NICs
Due on 31st Jan in tax year and 31st July in following tax year
Not paid when amount payable less than £1000 or less than 20% of total tax liability.
What is a balancing payment?
When is it due?
How is it calculated?
Balancing payment is the outstanding balance and due on 31st Jan following end of tax year.
Income tax liability relating to year: X
Payments on account relating to last year (X)
= Balancing payment X
Penalties for late payments are charged on? (3)
What are the penalties?
Charged on:
- balancing payments
- additional tax payments form amendments
- tax payable under a discovery assessment
More than 1 month late: 5% of unpaid tax
More than 6 months late: 5% of unpaid tax
More than 12 months late: 5% of unpaid tax
Interest
What is the annual late payment interest?
What is the annual repayment interest?
What changes with repayment?
Late payment interest is 3.25% annually.
Repayment interest is 0.5% annually.
Worked out from the later of
- due date
- date HMRC received the tax
What is a compliance check?
What are the two conclusions?
Written notice from HMRC asking about completeness or accuracy of return.
Doesn’t have to contain detail about what they think is sketchy but has to say what information they need.
Conclusions:
- no amendments
- propose amendments as a result of check. taxpayer has 30 days to appeal if unhappy with amendments.
What is a discovery assessment? How does this effect the deadline?
Raised if HMRC learn information about a taxpayers affairs after the normal time period.
Normally: 4 years
Careless: 6 years
Deliberate: 20 years
What can an appeal be made on? (3)
Discovery assessments
Reasonableness of request of info in compliance check
Amendments to self-assessment arising from a compliance check.
If an appeal is not settled, what options does a taxpayer have? (2)
For the case to be reviewed by another HMRC officer
For it to be heard at a first-tier tax tribunal
What is a standard penalty?
What is the formula for this?
Penalty for failure to notify a liability of tax or submission of false returns.
Penalty = % x potential lost revenue
% = obtained from chart in exam PLR = tax unpaid as a result of omission.
