6 - Tax Compliance and self-assessment Flashcards
What taxes are paid via self-assessment?
Income tax
Class 2 and 4 NICs
Capital Gains Tax (CGT)
How is the High Income Child Benefit Charge collected?
Via self-assessment
What is a Notification of Chargeability and when does it need to me made by?
Advising HMRC of your intent to do a tax return, for the first time.
Before 5 October (window of 6 months after tax year end it relates to)
What are the deadlines to submit a tax return and when is the owed tax then due?
Paper – 31 October
Electronic – 31 January
Owed by midnight on 31 January
What is the late penalty for failing to submit a tax return before the due date?
£100 applied immediately
£10 per day, charged once the return is 3 months late for a maximum of 90 days
the higher of £300 or 5% of the tax due, applied if the form is 6 months late
a further £300 or 5% of the tax due (whichever is higher), applied if the form is 12 months late.
HMRC can carry out a compliance check on anyone’s tax return, what are these also known as?
An enquiry
How soon after submitting your tax return do HMRC normally perform a compliance check, if required?
Within 12 months
What is the balancing payment
The balancing payment consists of an adjustment calculated by comparing the actual tax payable for the year with the total tax already paid through the payments on account. This could involve a payment to or from HMRC.
What is the likely outcome of a compliance check on your tax return?
Amendment to your tax return
What is GAAR and what is it’s purpose?
General Anti-Abuse Rule - it prevents taxpayers entering into abusive tax arrangements/avoidance schemes, not yet registered with HMRC. It also helps them pay the right amount of tax.
For how long can a taxpayer amend their own tax return after it’s been submitted?
Within a year of submitting, or 15 months if submitted by paper
What is the penalty if a case is tackled through GAAR?
Up to 60% of the counteracted tax
Tax avoidance schemes should be disclosed to HMRC as per which set of rules?
Disclosure of Tax Avoidance Schemes (DOTAS)
What is an Accelerated Payment Notice?
A notice to pay a tax charge before a dispute has been settled under GAAR
What is a Follower Notice?
A notice for a taxpayer to amend their tax return due to an illegitimate tax advantage.
What is the penalty for failing to act upon a Follower Notice?
30% of the disputed tax
Further 20% charged depending on the outcome
When are the first two payments on account and the final balancing payment due?
Payment on account - 31 January (of the tax year concerned)
Payment on account - 31 July (after tax year concerned)
Balance of payment - 31 January (after tax year concerned)
What is the penalty for a late balancing payment?
5% after 30 days
Then 5% at 5 months
Then 5% after another 6 months (11 months total)
What taxes are paid on the balancing payment?
Class 2 NICs
Capital Gains Tax (CGT)
Student loan repayments
In which 2 circumstances might the payments on account not be required?
Income in the last tax year was less than £1,000
80% of their income tax was taken via PAYE
Balancing payments can be collected via PAYE in a later year, if the taxpayer owes how much and files the tax return by when?
Less than £3,000 and by 30 December online. (31 October by paper)
If the total tax due for 2022/23 was £50,000, what would the next 2 payments on account be due and when?
£25,000 31 January 2024
£25,000 31 July 2024
Individuals and businesses unable to pay the full tax due on time may be able to make a time to pay arrangement online, but they must owe less than how much?
£30,000
If a time to pay arrangement has been made online, how soon would you need to pay off the tax owed?
Is interest applied?
Up to 12 months
Interest is applied, but can void penalties by doing this
