Abuse & Penalties

Question 1

General Anti-Abuse Rules

(GAAR - Goal + 4 Qualifies)

Answer 1

Aims to combat abusive arrangements

A tax arrangements?
Tax related to GAAR?
Design of arrangement is to avoid tax?
Is the arrangement abusive?

Question 2

Tax Avoidance - DOTAS

Abbreviation + Which Acts

Answer 2

DOTAS (Disclosure of Tax Avoidance Schemes)

Finance Act 2004

Finance Act 2014 reinforces

Question 3

Drawbacks to using tax avoidance schemes:

(Quick Fire x5)

Answer 3

HMRC Spotlight

Scheme may be ineffective

Retrospective legislation

Costs to Defend / Negotiate

Uncertainty Stress

Question 4

What is IR35

(Key Tests x3 - Con Sub Mut)

Answer 4

Control - Are you able to decide who you work for

Substitution - Personal service or can a sub do it?

Mutuality of Obligation - Employers must offer the work and employee must accept

Description: IR35 has been in force since 2000 - Purpose is to prevent “disguised employment”

Question 5

What is Tax mitigation?

Answer 5

Legal tax structures that reduce tax e.g. ISAs, Pensions, VCTs. etc.

Question 6

What is Tax Evasion?

Answer 6

Illegal - Deliberately not paying tax owed in tax structures or no.

Question 7

What is Tax Avoidance?

Answer 7

Grey area of tax structures - May be legal may not.

Question 8

Self-assessment non-compliance penalties?

(Day 1)

Answer 8

£100 if return submitted late.

Question 9

Self-assessment non-compliance penalties?

(First 3 Months)

Answer 9

£10 per day on top of original up to 90 Days.

Question 10

Self-assessment non-compliance penalties?

(6 Months Late)

Answer 10

Penalty is the higher of £300 or 5% of tax outstanding

Question 11

Self-assessment non-compliance penalties?

(Month 12s)

Answer 11

Penalty is the higher of £300 or 5% of tax outstanding

Question 12

Self-assessment non-compliance penalties?

(Greater than 12 months?)

Answer 12

Penalty is 70% or 100% of tax outstanding