Chapter 1 - UK Tax System Flashcards
What is indirect Tax?
Example VAT: Collected by intermediary (retailer) from bearer of ultimate tax cost (customer). Intermediary later files tax return and forwards tax collected to HMRC.
What is Direct Tax?
Collected by HMRC directly from payer: income tax, corporation tax, capital gains tax
What is an accountants obligation who learns of an error or omission in a client’s tax return?
Advise client of situation and recommend disclosure to HMRC
What are the three things an accountant must do if a client fails to inform HMRC if a material error/omission in tax return?
1) Cease to act for client
2) Inform HMRC he is no longer acting for client (should not provide details of why)
3) Make a money laundering report
What are the three consequences of being found to be a dishonest tax agent?
1) Civil penalty of up to £50,000
2) Where penalty exceeds £5000, HMRC may publish details of penalised agent
3) With agreement in tax tribunal, HMRC can access working papers of dishonest agent
When does the tax year run from?
6 April 2023 to 5 April 2024 (year specific for exam)
What are the three statutory tests for automatic non-UK residency?
If a person is in the UK for less than:
1) 16 days, or
2) 46 days and has not been UK resident during previous three tax years, or
3) 91 days, of which fewer than 31 days were workings in the UK - he works full time overseas
What are the three statutory tests for automatic UK residency?
A person is in the UK if they:
1) Is in the UK for 183 days or more during the year
2) He has only one home in the UK
3) He works full time in the UK and more than 75% of his working days are in the UK
What are the four statutory sufficient ties tests for UK arrivers?
1) Having close family (spouse, civil partner, cohabitee or minor child) resdient in UK
2) Having UK accomodation in which individual spends atleast one night in tax year
3) Doing substantive work in UK (more than 3 hours or more on 40 or more days in the tax year)
4) Being in the UK for more than 90n days during the either or both of the previous tax years
What are the 5 statutory sufficient ties tests for UK Leavers?
1) Having close family (Spouse, cohabitee, civil partner, minor child) as UK resident
2) Having Uk accommodation in which the indivudal spends more than one night in a Tax year
3) Doing substantive work in UK (more than 3 hours or more on 40 or more days in the tax year)
4) Being in the UK for more than 90n days during the either or both of the previous tax years
5) Spending more time in the UK than in any other other country
