Chapter 6 - Tax compliance and self assessment

Question 1

Rory, who is self-employed, has a tax liability for 2020/21 of £18,000. If he files his 2020/21 tax return online, by when must he have done so, and what first payment on account for 2021/22 is made at that time?

Select one:

a. 31 January 2022 and a £9,000 first payment.
b. 31 January 2021 and a £18,000 first payment.
c. 31 October 2021 and a £18,000 first payment.
d. 31 October 2022 and a £9,000 first payment.

Answer 1

a. 31 January 2022 and a £9,000 first payment.

chapter reference 6A2A

Question 2

Geoff is a self-employed builder who has net profits of £40,000 for 2020/21, and an income tax liability of £6,000. His turnover was £60,000 but he expects this will rise to £80,000 this year. Under self-assessment, assuming this is his only income, his first payment on account for 2021/22 is:

Select one:

a. £8,000 on 31 January 2022.
b. £12,000 on 31 January 2021.
c. £3,000 on 31 January 2022.
d. £6,000 on 31 January 2023.

Answer 2

c. £3,000 on 31 January 2022.

chapter reference 6A2A

Question 3

For the tax year 2021/22, the income tax payments for a self-employed individual are a payment on account on:

Select one:

a. 31 January 2022, a second payment on account on 31 July 2022 and a balancing payment on 31 January 2023.
b. 31 July 2022, a second payment on account on 31 January 2023 and a balancing payment on 31 July 2023.
c. 31 January 2021, a second payment on account on 31 July 2021 and a balancing payment on 31 January 2022.
d. 31 July 2021, a second payment on account on 31 January 2022 and a balancing payment on 31 July 2022.

Answer 3

a. 31 January 2022, a second payment on account on 31 July 2022 and a balancing payment on 31 January 2023.

chapter reference 6A2A-B

Question 4

An employer failed to pay HMRC money owed for PAYE and National Insurance contributions on two occasions during 2021/22. Both times the payment was two months late. What penalty will be incurred for the second late payment, which was for an amount due of £68,500?

Select one:

a. £1,370.
b. £6,850.
c. £3,290.
d. £685.

Answer 4

d. £685.

chapter reference 6B3D

Question 5

Emily is self-employed and has calculated that her income tax liability is £25,000 for 2020/21 and £35,000 for 2021/22. How much income tax will she pay on 31 January 2023?

Select one:

a. £12,500.
b. £25,000.
c. £17,500.
d. £27,500.

Answer 5

d. £27,500.

chapter reference 6A2B

Question 6

Jules is unable to pay his £70,000 tax by the 31 January 2022 deadline. Under the self-assessment system, he will receive a:

Select one:

a. £3,500 penalty if he pays his tax on 6 March 2022.
b. £1,050 penalty if he pays his tax on 28 February 2022.
c. £3,500 penalty if he pays his tax on 28 February 2022.
d. £1,750 penalty if he pays his tax on 6 March 2022.

Answer 6

a. £3,500 penalty if he pays his tax on 6 March 2022.

chapter reference 6A4

Question 7

William made a net profit of £30,000 in the tax year 2021/22. Under self-assessment, when will he need to pay his balancing payment for this tax year?

Select one:

a. January 2023.
b. January 2022.
c. July 2022.
d. July 2023.

Answer 7

a. January 2023.

chapter reference 6A2B

Question 8

Lena, who is an employed higher-rate taxpayer, wishes to file her return by paper for 2021/22. By which date must she do so?

Select one:

a. 31 October 2022.
b. 6 April 2022.
c. 31 January 2023.
d. 30 December 2022.

Answer 8

a. 31 October 2022.

chapter reference 6A1C

Question 9

What is the latest date by which an employer must have given their employees a P60 for 2020/21?

Select one:

a. 31 July 2021.
b. 6 April 2021.
c. 31 October 2021.
d. 31 May 2021.

Answer 9

d. 31 May 2021.

chapter reference 6A6

Question 10

Jed, who is self-employed, fails to make his balancing payment on 31 January 2022. How long will it be before he is charged a 5% penalty on any tax that still remains unpaid?

Select one:

a. Once 14 days have passed.
b. Once 30 days have passed.
c. Once two months have passed.
d. Once 21 days have passed.

Answer 10

b. Once 30 days have passed.

chapter reference 6A4

Question 11

Within how many months of their receipt of a self-assessment tax return does HMRC usually have the right to carry out a compliance check into its accuracy?

Select one:

a. Six.
b. Three.
c. Twelve.
d. Nine.

Answer 11

c. Twelve.

chapter reference 6A5C

Question 12

An employer pays HMRC all money owed for PAYE and National Insurance contributions electronically. For the tax month of September this money must be paid across to HMRC by:

Select one:

a. 22 October.
b. 19 October.
c. 31 October.
d. 14 October.

Answer 12

a. 22 October.

chapter reference 6B3C

Question 13

Geoff is employed and has calculated that for 2021/22 he has underpaid income tax of £2,500. He can arrange for this to be collected via his PAYE coding, provided he files his return on paper by:

Select one:

a. 31 October 2022 or online by 31 January 2023.
b. 30 December 2022 or online by 31 January 2023.
c. 31 October 2022 or online by 30 December 2022.
d. 31 October 2021 or online by 31 January 2022.

Answer 13

c. 31 October 2022 or online by 30 December 2022.

chapter reference 6A1C

Question 14

At a board meeting on 10 January a company decides to pay its managing director a bonus of £25,000. This is documented in the meeting minutes, which are distributed to the board members on 20 January. The bonus is paid on 2 February and is ratified formally at the company’s AGM on 1 March. On what date will PAYE be operated in respect of the bonus?

Select one:

a. 1 March.
b. 20 January.
c. 10 January.
d. 2 February.

Answer 14

c. 10 January.

chapter reference 6B3F

Question 15

Jenny, who is self employed, has made a gift aid donation in 2021/22 which she wishes to carry back to the previous year. What is the correct procedure in this situation?

Select one:

a. The relief is calculated as if it were given in 2020/21, but any repayment is included in the calculation for 2021/22. There will also be a reduction in the payments on account for 2021/22.
b. The relief is calculated as if it were given in 2020/21, but any repayment is included in the calculation for 2021/22. There will be no reductions in payments on account for 2021/22.
c. The relief is calculated as if it were given in 2020/21 and repaid immediately. There will also be a reduction in the payments on account for 2021/22.
d. The relief is calculated as if it were given in 2021/22 but will be repaid immediately. There will also be a reduction in the payments on account for 2021/22.

Answer 15

b. The relief is calculated as if it were given in 2020/21, but any repayment is included in the calculation for 2021/22. There will be no reductions in payments on account for 2021/22.

chapter reference 6A3

Question 16

Malcolm, who is self-employed, had an income tax liability of £14,000 for 2020/21. His income tax liability for 2021/22 is £20,000 and he also has a capital gains tax liability of £4,000. Malcolm’s balancing payment on 31 January 2023 will be:

Select one:

a. £4,000.
b. £20,000.
c. £10,000.
d. £6,000.

Answer 16

c. £10,000.

chapter reference 6A2B

Question 17

Gillian, who does not normally receive a self-assessment tax return, surrendered an investment bond in July 2021, which resulted in an additional income tax liability. By what date must she notify HMRC that she has further tax to pay?

Select one:

a. 31 January 2023.
b. 6 April 2022.
c. 5 April 2023.
d. 5 October 2022.

Answer 17

d. 5 October 2022.

chapter reference 6A1A

Question 18

Sian makes a gift aid donation to charity in 2021/22 and she has been advised to have this backdated to the previous tax year. What would the position be?

Select one:

a. She has the option to choose how the tax relief is allowed, either backdated or treated as a repayment.
b. She does not have the option to backdate the donation for tax purposes.
c. She could have it treated as being paid in the previous tax year, and she will receive relief in 2021/22 as a repayment.
d. She could have it treated as being paid in the previous tax year, and her previous year’s tax liability will be amended accordingly.

Answer 18

c. She could have it treated as being paid in the previous tax year, and she will receive relief in 2021/22 as a repayment.

chapter reference 6A3

Question 19

Trevor has noticed that he made an error on his self-assessment tax return for 2020/21. What is the latest date that Trevor can notify HMRC of an amendment to his return?

Select one:

a. 31 January 2023.
b. 6 April 2022.
c. 6 April 2023.
d. 31 January 2022.

Answer 19

a. 31 January 2023.

chapter reference 6A5B

Question 20

Tom has been asked by HMRC to make an accelerated payment of a disputed tax liability. What is the most likely reason for this?

Select one:

a. He has been found by HMRC to be using a failed tax avoidance arrangement.
b. He has been found by HMRC to be using an effective tax avoidance arrangement.
c. He has been found by HMRC to be using a tax evasion scheme.
d. He has already made an up front payment for a proportion of a disputed tax liability.

Answer 20

a. He has been found by HMRC to be using a failed tax avoidance arrangement.

chapter reference 6C3