Chapter 13 - Tax administration for individuals

Question 1

Under the self assessment system, who is the onus on to calculate the tax liability?

Answer 1

The taxpayer

Question 2

When must payment of an individuals income tax be paid by?

Answer 2

31st of January following the end of the tax year

Question 3

What is the deadline for submitting a tax return for the year 2019/2020?

Answer 3

31 October 2020 for paper return

31 January 2021 for an electronic return

Question 4

What date is known as the filing date?

Answer 4

31 Jan following the tax year.

Question 5

When is a calculation of tax automatically provided by HMRC?

Answer 5

When it is filed electronically

Question 6

When is a calculation of tax provided for paper returns?

Answer 6

If provided by 31 October

Question 7

Within how long of filing can HMRC correct any mistakes?

Answer 7

9 months

Question 8

Within how long of filing can the taxpayer correct any mistakes?

Answer 8

12 months of 31 January filing date

Question 9

Within how many years of the filing date can a determination be made?

Answer 9

3 years

Question 10

What are the three things a business must keep for their records?

Answer 10

• All receipts and expenses
• All goods and purchases sold
• All supporting documents relating to transactions for the business

Question 11

For how long must a self employed taxpayer keep all their records for?

Answer 11

5 years after the 31 January filing date

Question 12

What are the four liabilities a taxpayer must settle by 31 January following the tax year?

Answer 12

• Income tax
• Class 2 national insurance
• Class 4 national insurance
• Capital gains

Question 13

What are the two exceptions to payment on accounts?

Answer 13

• If total tax liability for previous tax year is less that £1000
• More than 80% of previous tax liability was deducted at source

Question 14

When are the payment on accounts due for 2019/2020?

Answer 14

• first POA – 31 January 2020
• second POA – 31 July 2020.

remaining due on 31 Jan 2021

Question 15

What are POA’s for?

Answer 15

Income tax and Class 4 NIC

Question 16

How do you calculate the ‘relevant’ amount?

Answer 16

Total tax liability (income tax and class 4 NIC's) 
Less: PAYE

Question 17

What are a taxpayers POA’s based on?

Answer 17

The previous tax years relevant amount

Question 18

Can a taxpayer make a claim to reduce their POA’s?

Answer 18

Yes - Must state grounds for making the claim

Question 19

When is the balancing payment for payments on accounts due?

Answer 19

31 January following tax year

Question 20

How do you calculate the balancing payment?

Answer 20

Total income tax liability for the year
Less: PAYE
Less: POA’s

Question 21

What happens if the taxpayer has overpaid with their POA’s?

Answer 21

HMRC with repay them

Question 22

What are the two types of interest?

Answer 22

• Late payment interest (3.25%)

- Repayment interest (0.5%)

Question 23

When is late payment interest charged?

Answer 23

Automatically if any tax is paid late

Question 24

What are the penalties for late payments (do not apply to POA’s)

Answer 24

More than 1 month -5%
More than 6 months - Additional 5%
More than 12 months additional 5%

Question 25

What do HMRC have to give before commencing a compliance check?

Answer 25

Written notice

Question 26

Within how many months must HMRC give written notice for a compliance check?

Answer 26

12 months form submitting the tax return

Question 27

How long do you have to appeal any amendments made by HMRC in a compliance check?

Answer 27

30 days

Question 28

What are the maximum penalties for submission of incorrect tax returns or failure to notify liability to tax.

Answer 28

Genuine mistake (for incorrect returns only) - No penalty

Careless/Failure to take reasonable care - 30%

Deliberate but no concealment - 70%

Deliberate with concealment - 100%

Question 29

What are the penalties for late filing of returns?

Answer 29

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)

Question 30

What is the purpose of a P45?

Answer 30

Provided to employee when they leave?

Question 31

What is the purpose of a P60?

Answer 31

Year end summary

Question 32

What is the purpose of a P11 D?

Answer 32

Summary of benefits

Question 33

When is the employee provided with a P60?

Answer 33

31 May following tax year

Question 34

When is the employee provided with a P11 D?

Answer 34

Provided 6 July following tax year.

Question 35

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?

Answer 35

5 October 2020

Question 36

If a taxpayer is not satisfied with a decision made by HMRC they can have their case referred to:

Answer 36

• Tax tribunal and

- Another HMRC officer

Question 37

How much is the POA?

Answer 37

50% of the previous years relevant amount

Question 38

Why might HMRC carry out a compliance check

Answer 38

Suspicion that income has been undeclared
or
Incorrectly claimed