14. Tax admin for individuals

Question 1

Self-assessment tax returns include what liabilities? (4)

Answer 1

• income tax
• class 2
• class 4
• CGT

Question 2

Filing dates are due at the latest of? (3)

Answer 2

• 31st October where paper
• 31st Jan where electronic
• 3 months after notice from HMRC to file

Question 3

Amendments are to be made when and who is this dependent on? (2)

Answer 3

Due within 9 months where corrected by HMRC

Due within 12 months of 31st Jan filing date where corrected by tax payer

Question 4

Where no return is filed, what do HMRC have the right to do? What does this mean? When must this be done by?

Answer 4

Determination: estimate on which payments will be made, likely higher than actual liability. To be done within 3 years of 31 Jan filing date.

Question 5

Compliance checks are due within?

Discovery assessments are due within?

Answer 5

compliance checks due within 12 months of filing date.

discovery assessment is 4 years.

Question 6

When are taxpayers exemt from POA? (2)

Answer 6

• liability less than £1,000 post PAYE

- 80% of their liability deducted at source

Question 7

Calculation for POA

Answer 7

Class 4 and income tax liabilty:X
Less: PAYE (X)
= POAs

Question 8

When are POA due

Answer 8

31st Jan and 31st July following y/e

Question 9

Claims to reduce POA can reduce POA to?

What happens if claim is incorrect?

Answer 9

Half original amount or nothing.

Where claims are incorrect interest is charged on tax underpaid.

Question 10

Calculation for balancing payment

Answer 10

Total tax liability X
Less: PAYE (X)
Less: POA (relating to last year): (X)
= balancing payment

Question 11

Late payment interest is taxable daily (but on exam round monthly as well as to nearest £) on what? (4)

Answer 11

• POA
• Balancing payments
• Tax due following amendments
• Tax due following discovery assessments

Question 12

Late payment penalties are at what rate?

Answer 12

More than 1 month: 5% of tax due
More than 6 months: Additional 5% of tax due
More than 12 months: Additional 5% of tax due

Question 13

What are the standard penalties?`

Answer 13

Genuine mistake: no penalty
Careless mistake: 30% of revenue lost
Deliberate but no concealment: 70% of revenue lost
Deliberate with concealment: 100% of revenue lost

Question 14

Penalties for late filing

Answer 14

Late: £100
3 months late: £10 per day late capped at 90 days
6 months late: 5% of tax due (min. £300)
12 months late:
- not deliberate: 5% of tax due (min. £300)
- deliberate but not concealed: 70% of tax due (min. £300)
- deliberate and concealed: 100% of tax due (min. £300)

Question 15

Deadline for employers NIC and income tax?

When does this change?

Answer 15

19th of each month (2 weeks following end of tax period)

Changes when more than 250 employees to the 22nd of each month. This is the default assumption unless stated otherwise.

Question 16

When can employers make quarterly payments on NICs and income tax?

Answer 16

Where average monthly PAYE/NI payments are less than £1,500

Question 17

Real time infomation: what is it?

Penalties for late filing?

Answer 17

Summary of what employees have actually been paid within the year to what they should have been paid.

1 - 9 empl: £100 monthly penalty
10 - 49:  £200 monthly penalty
20 - 249: £300 monthly penalty
250+: £400 monthly penalty
If more than 3m late, additional 5% of tax and NICs due.

Question 18

Purposes of following forms

P45
P60
P11D

Answer 18

P45: given when leaving employment for tax purposes
P60: given at end of each year, due 31st May of following tax year.
P11D: summary of benefits provided by 6th July of following tax year.