Chapter 1 Flashcards
What’s case law?
Decisions made by a judge
Decisions made in tax cases brought before the courts. Usually an interpretation and then sets precedent for future ones.
What is a statement of practice?
Explains the way HMRC explains the law
What is an extra-statutory concession
Specific tax payers get relaxed tax legislation - Although this was challenged and gradually being withdrawn in 2005
What is internal guidance manuals?
HMRC produced manuals for their staff but publically available
What is the neutrality principle?
Tax should not distort choice
What is the direct/indirect prinicple?
Direct taxes are paid by those who generate funds e.g., income tax
Indirect - transaction based e.g., VAT
What is the progressive/regressive prinicple?
Progressive - taxes increase with income
Regressive - taxes decrease with income e.g., national insurance
What is the unit/value principle?
Unit - Taxes calculated as flat rate per item regardless of value e.g., beer
Value - Tax is as a percentage
What is the ability to pay/benefit prinicple?
Opposing arguments that tax should be based either on ability of tax payer to pay (e.g. income tax) or on the benefits received e.g., NHS is available to all so should be funded by everyone
What are external influences?
Global concerns - climate change and the effect of oil and food pricing on the cost of living
What is income tax?
Tax payable on earnings both from self employment and employment under PAYE
What is National Insurance Contributions (NIC)
Payable by employed and self-employed and by business (sole trader, partnership or company)
What is corporation tax?
Payable by companies on all their incomes and gains
What is capital gains tax?
Payable by individuals on disposal of capital assets including land, buildings and shares but can also include antiques
What is value added tax (VAT)
Payable on most goods and services by the final consumer
Difference between financial year and tax year
FY - 1 APRIL to 31 March
Tax - 6 April to 5 April
What is Making Tax digital for Businesses (MTDfB)
Provides businesses with a modern system to keep their tax systems up to date and provide information to HMRC digitally on a quarterly basis
Only for business for VAT purpose atm
Responsibilities of HMRC
- Collecting and administering IT, CGT, NIC, CT and VAT
- Paying and administering universal credit, tax credit and child benefit.
- Collecting repayment of student loans
- Ensuring adherence to minimum wage rules
- Protect society from tax fraud, smuggling and illegal importation of drugs
What are the two types of compliance checks?
Pre return checks
Enquiries into returns already submitted
What’s a determination by HMRC?
An estimation HMRC makes and treats as tax owed.
Determination must be made within 3 years of the statutory filing date.
What is a discovery assessment?
HMRC coming into possession of information about a tax payers tax affairs after the normal time limit for compliance checks
What are the time limits for Discovery assessments?
- 4 years at the end of the relevant period if there is no careless or deliberate behaviour
- 6 years from end of relevant period for careless behaviour
- 20 years if due to deliberate behaviour.W
What is the payment support service?
Assistance for businesses that cannot pay tax they owe by the relevant deadline.
Might offer a TTP (time to pay) and payments by instalments.
Late payments = interest charged but not no fines
What is direct recovery from HMRC?
HMRC collecting tax owed by tax paper directly from the tax payer’s bank account
