Chapter 1 - UK Tax

Question 1

Types of Tax

Answer 1

Income tax - Investment Income and earnings
NICs - Eee and Eer
Capital gains tax - Land, buildings, shares, antiques
Inheritance tax - Estates and Gifts
Corporation Tax - Company
VAT - Supply of goods and services payable by the final consumer

Question 2

Direct Tax

Answer 2

Direct - taxpayer paying direct tax to HMRC,
Direct Revenue Tax -based on income received e.g. Income and Corporation tax
Direct Capital tax - Value of disposed assets through sale, gift, inheritance

Question 3

Indirect Tax

Answer 3

Collected from the taxpayer via a retail shop, intermediary then pays tax to HMRC e.g. VAT

Question 4

Purpose of HMRC

Answer 4

Ensure money available for public services e.g. Financial support
Implement statute law
Oversee UK tax administration

Question 5

Recalculation of tax from HMRC officers

Answer 5

Can be done on individual tax payers but not corproation tax

Question 6

Tax Evasion vs Avoidance

Answer 6

Evasion = Illegal - Fines and imprisonment. e.g. Suppressing or falsifying information
Avoidance = Legal - Using to ones own advantage aka Tax Planning e.g. Investing in ISAs, using Loopholes

Question 7

Professional and Ethical Guidance

Answer 7

Objectivity - Free from Bias
Professional Behaviour - Do not discredit profession
Professional Competence and Due Care
Integrity - Honest
Confidentiality

Question 8

Errors Discovered

Answer 8

E.g. Not declaring taxable income, claiming un-entitled relief, not notifying a mistake
If a mistake is made:
1. Determine whether act is genuine or deliberate
2. Explain to the client the ramifications of not reporting and advise reporting it
3. Member writes and explains the error
4. Consider whether withdrawing Client
5. If client refuses: Cease work and notify HMRC, consider position with Money Laundering