Chapter 13 - Tax administration for individuals Flashcards
Under the self assessment system, who is the onus on to calculate the tax liability?
The taxpayer
When must payment of an individuals income tax be paid by?
31st of January following the end of the tax year
What is the deadline for submitting a tax return for the year 2019/2020?
31 October 2020 for paper return
31 January 2021 for an electronic return
What date is known as the filing date?
31 Jan following the tax year.
When is a calculation of tax automatically provided by HMRC?
When it is filed electronically
When is a calculation of tax provided for paper returns?
If provided by 31 October
Within how long of filing can HMRC correct any mistakes?
9 months
Within how long of filing can the taxpayer correct any mistakes?
12 months of 31 January filing date
Within how many years of the filing date can a determination be made?
3 years
What are the three things a business must keep for their records?
- All receipts and expenses
- All goods and purchases sold
- All supporting documents relating to transactions for the business
For how long must a self employed taxpayer keep all their records for?
5 years after the 31 January filing date
What are the four liabilities a taxpayer must settle by 31 January following the tax year?
- Income tax
- Class 2 national insurance
- Class 4 national insurance
- Capital gains
What are the two exceptions to payment on accounts?
- If total tax liability for previous tax year is less that £1000
- More than 80% of previous tax liability was deducted at source
When are the payment on accounts due for 2019/2020?
- first POA – 31 January 2020
- second POA – 31 July 2020.
remaining due on 31 Jan 2021
What are POA’s for?
Income tax and Class 4 NIC
How do you calculate the ‘relevant’ amount?
Total tax liability (income tax and class 4 NIC's) Less: PAYE
What are a taxpayers POA’s based on?
The previous tax years relevant amount
Can a taxpayer make a claim to reduce their POA’s?
Yes - Must state grounds for making the claim
When is the balancing payment for payments on accounts due?
31 January following tax year
How do you calculate the balancing payment?
Total income tax liability for the year
Less: PAYE
Less: POA’s
What happens if the taxpayer has overpaid with their POA’s?
HMRC with repay them
What are the two types of interest?
- Late payment interest (3.25%)
- Repayment interest (0.5%)
When is late payment interest charged?
Automatically if any tax is paid late
What are the penalties for late payments (do not apply to POA’s)
More than 1 month -5%
More than 6 months - Additional 5%
More than 12 months additional 5%
What do HMRC have to give before commencing a compliance check?
Written notice
Within how many months must HMRC give written notice for a compliance check?
12 months form submitting the tax return
How long do you have to appeal any amendments made by HMRC in a compliance check?
30 days
What are the maximum penalties for submission of incorrect tax returns or failure to notify liability to tax.
Genuine mistake (for incorrect returns only) - No penalty
Careless/Failure to take reasonable care - 30%
Deliberate but no concealment - 70%
Deliberate with concealment - 100%
What are the penalties for late filing of returns?
After due date - £100 fixed penalty
3 months late - Daily penalty of £10 per day (90 days)
6 months late - 5% of tax due (minimum of £300)
More than 12 months where witholding info was…
not deliberate - Additional 5% of tax due (minimum of £300)
Deliberate no concealment - 70% tax due (minimum of £300)
Deliberate with concealment - 100% tax due (minimum of £300)
What is the purpose of a P45?
Provided to employee when they leave?
What is the purpose of a P60?
Year end summary
What is the purpose of a P11 D?
Summary of benefits
When is the employee provided with a P60?
31 May following tax year
When is the employee provided with a P11 D?
Provided 6 July following tax year.
A taxpayer who does not normally receive a tax return must notify HMRC of any chargeability for the tax year 2019/20 by which date?
5 October 2020
If a taxpayer is not satisfied with a decision made by HMRC they can have their case referred to:
- Tax tribunal and
- Another HMRC officer
How much is the POA?
50% of the previous years relevant amount
Why might HMRC carry out a compliance check
Suspicion that income has been undeclared
or
Incorrectly claimed
