Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Tax > Income Tax: Administration and Procedures > Flashcards

Income Tax: Administration and Procedures Flashcards

1
Q

When does Revenue issue a “Notice of Assessment”? (3 instances)

A

Revenue issues a “Notice of Assessment” where:
1. A return has not been filed.
2. It’s not satisfied with the return.
3. It believes it is not a full and true return.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What can a taxpayer do if they disagree with a Revenue assessment?

A

Appeal to the Tax Appeals Commission (TAC).
Must appeal within 30 days.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Under what conditions can a taxpayer appeal an assessment?

A

Taxpayer can only appeal if:
1. They have filed a return for the period.
2. They have paid the correct tax they believe is due.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What happens if Revenue objects to an appeal?

A

If Revenue objects to the appeal:
1. Send objections to the Tax Appeals Commission (TAC) within 30 days.
2. Taxpayer can respond to objections within 14 days.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What must a Notice of Appeal include?

A
  1. Must be in writing on a notice of appeal form.
  2. Must specify the precise item in the assessment they dispute.
  3. Must detail the grounds for disputing the item.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

How are appeals adjudicated with a hearing?

A
  1. All appeal hearings are heard in public.
  2. Parties are given 14 days’ notice of the hearing.
  3. Parties are notified of the decision within 21 days.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

How are appeals adjudicated without a hearing?

A

They notify both parties.
Neither party requests a hearing within 21 days.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What happens if an appeal is dismissed?

A

Original tax assessed by Revenue is confirmed and immediately payable.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What happens if an appeal is determined?

A

Tax is either collected or repaid by Revenue.
Either party may appeal to the High Court, on a point of law only.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

How can appeals progress through the courts?

A
  1. High Court:
    If either party is dissatisfied with the determination of the Appeals Commission (AC) on a ‘point of law’, they can request the AC to refer the case to the High Court within 21 days.
  2. Court of Appeal:
    If either party is dissatisfied with the decision of the High Court, they can appeal to the Court of Appeal.
  3. Supreme Court:
    If the matter is deemed of general public importance or in the interests of justice, the appeal will be heard by the Supreme Court.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

How can an appeal be settled? (4 ways)

A
  1. Agreement is reached between the taxpayer & Revenue.
  2. Either party withdraws their appeal.
  3. Appeal is determined by Appeals Commissioner or court.
  4. By default (failure to be represented at hearing).
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is a Level 1 Revenue compliance intervention?

A

Intervention to support compliance (e.g., bulk-issue non-filer reminders).
Taxpayer retains the right to unprompted qualifying disclosure.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What is a Level 2 Revenue compliance intervention?

A

Intervention to challenge non-compliance using risk review or Revenue audit.
Taxpayer retains the right to prompted qualifying disclosure.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is a Level 3 Revenue compliance intervention?

A

An intervention confronting non-compliance by means of an investigation.
Taxpayer no longer entitled to make qualifying disclosure.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is the purpose of Level 1 compliance interventions?

A

To support taxpayers (and compliance) by “reminding them of their obligations and providing them with the opportunity to correct errors without the … need for a more in-depth inquiry.”

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What are examples of Level 1 compliance interventions and disclosure opportunities?

A

Examples:
1. Reminders of outstanding returns.
2. Request to self-review.
3. An unprompted disclosure can be made. (refers to a voluntary declaration made by a taxpayer to the tax authorities, where they report previously undisclosed or incorrectly reported tax liabilities before any inquiry or investigation has been initiated by the tax authority regarding that specific issue or taxpayer.)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What are Level 2 compliance interventions and the 2 types of compliance interventions?

A

Risk-based reviews on data provided by taxpayers.

There are 2 types:
1. Risk Review.
2. Revenue Audit.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is a Level 2 Risk Review?

A

“A focused intervention to examine a risk or a small number of risks on a return.”

Example: The risk review may focus on a particular aspect of a return.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What initiates a Level 2 Revenue Audit?

A

Initiated where there is a greater level of perceived risk.

Can focus on a single issue or tax head, or involve an investigation across multiple taxes and tax periods.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

How can a Level 2 Revenue Audit be extended and what does it involve?

A

Can be extended to include additional issues, taxes, or years/periods depending on the issues uncovered.

An audit will also collect any tax in arrears.

Taxpayer may make a prompted qualifying disclosure for those other taxes or years.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is a “Field Audit”?

A

Conducted at the company’s place of business.
Part of most business audits.
Usually given notice.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is a “Desk Audit”?

A

Conducted by letter/phone for straightforward issues.
Common for Capital Acquisitions Tax (CAT) and Stamp Duty (SD) audits.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What does a Revenue Audit Notification include?

A
  1. Taxpayer is given 28 days’ notice of start of audit.
  2. Includes type of intervention & scope of the audit.
  3. Revenue auditor is confined to examining the issues as notified.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What can a taxpayer do from the date of Revenue Audit Notification?

A

Taxpayer can make a “Prompted qualifying disclosure” before the audit begins.
Taxpayer can no longer make an “Unprompted qualifying disclosure.”

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

What can a taxpayer do on the commencement of a field audit?

A

Taxpayer is given the opportunity to make a “Prompted qualifying disclosure.”
From that point, the taxpayer can no longer make a “Prompted qualifying disclosure.”

26
Q

What are the requirements and conduct guidelines during a Revenue Audit?

A
  1. Taxpayer is required to provide the necessary data.
  2. Auditor gives a receipt for any records removed.
  3. Auditor will try not to retain any records for longer than a month.
  4. Taxpayer should keep a written record of all requests and replies.
27
Q

What are Level 3 compliance interventions?

A

Level 3 compliance interventions are known as a Revenue investigation.
It “focuses on tackling high-risk practices and cases displaying risks of suspected fraud and tax evasion.”

28
Q

What is a Level 3 Revenue investigation?

A

An examination of a taxpayer’s affairs where Revenue has evidence or concerns of serious tax evasion.

29
Q

What additional actions can occur during Level 3 Revenue investigations?

A
  1. Some investigation cases may lead to criminal prosecution.
  2. Revenue auditors may visit a taxpayer’s place of business without notice.
  3. Once an investigation is initiated, the taxpayer cannot make any qualifying disclosure.
30
Q

How is a risk review concluded?

A

May be concluded by written communication from Revenue setting out the position.

A final meeting may be required if there was a site visit.

31
Q

How is a Revenue audit concluded?

A

Requires conclusion by a final meeting.

32
Q

How is a compliance intervention concluded when Revenue is satisfied?

A

Where Revenue is satisfied that the issue has been resolved.

A letter will be issued to confirm the intervention has been closed.

33
Q

What happens if a compliance intervention concludes that an additional liability is due?

A

Revenue advises the taxpayer of findings and agrees these with the taxpayer.

Revenue requests the taxpayer to provide a “written settlement offer formally setting out the tax, interest, and penalties due.”

34
Q

What is a taxpayer liable for if there is a default of tax identified in a Revenue Audit?

The phrase “default of tax identified” refers to a situation where tax authorities find that a taxpayer has not met their tax obligations according to the law.

A

The taxpayer will be liable for payment of:
1. Tax
2. Interest
3. Penalties

Penalties are expressed as a % of the tax. The % penalty depends on the circumstances and can be mitigated.

35
Q

What is the description and penalty for careless behaviour without significant consequences?

i.e. where an individual or entity makes a mistake due to negligence or a lack of due diligence, but the mistake does not result in substantial harm or significant financial loss.

A

Description: Lack of ‘due care’. An ordinary person would’ve foreseen that an act would cause a tax underpayment.

Careless behaviour without significant consequences: 20% penalty.

36
Q

What is the description and penalty for careless behaviour with significant consequences?

A

Description: Tax shortfall is more than 15% of tax liability. See example 1.1. of the textbook.

Careless behaviour with significant consequences: 40% penalty.

37
Q

What is the description and penalty for deliberate behaviour?

A

Description: Default displays “Intent”. Includes tax evasion and the non-operation of fiduciary taxes (PAYE & VAT).

Deliberate behaviour: 100% penalty.

38
Q

What happens if a tax default is considered an innocent error?

A

There is no penalty for a tax default if it was not deliberate and was not due to the failure to take reasonable care to comply with tax obligations.

39
Q

What factors are considered for a tax default to be deemed an innocent error? (4 factors)

A

Factors which will be taken into account:
1. Proper books and records
2. Frequency of “innocent errors”
3. Compliance record
4. Materiality of error

40
Q

What are technical adjustments, and when will they not give rise to a penalty?

A

“Technical adjustments” to a tax liability arise from differences in interpretation or the application of the legislation.

A technical adjustment will not give rise to a penalty where:
1. “Due care” has been taken by the taxpayer.
2. The matter did not involve “deliberate behaviour”.

41
Q

What happens with interest charges on technical adjustments?

A

Interest will be charged even if no penalty is charged.

42
Q

What does no loss of revenue mean, and can you provide an example?

A

No cost to the State even though tax was not properly charged.

Example: If no VAT is charged on a sale between VAT registered traders, no VAT is paid to Revenue, but no input VAT credit is being claimed by the other party.

43
Q

How must a claim in respect of no loss of revenue be made?

A

Any claim in respect of ‘no loss of revenue’ must be made by way of a qualifying disclosure.

44
Q

How can a return be self-corrected without penalty? (3 requirements)

A

A return may be self-corrected without penalty where:
1. Taxpayer notifies Revenue, within the time limit, of the adjustments being made.
2. Taxpayer provides a computation of the correct tax and statutory interest payable.
3. Payment, in full, accompanies the submission.

45
Q

What is the time limit for self-correction for IT, CT, CGT, CAT, and SD?

A

Within 12 months of the filing date for IT, CT, CGT, CAT, and SD.

46
Q

What is the time limit for self-correction for VAT?

A

By the due date of the IT/CT return for the period in which the VAT period ends.

47
Q

What is the time limit for self-correction for PAYE?

A

By the due date of the IT/CT return for the period the PAYE return is due.

48
Q

How are Revenue penalties mitigated (reduced)? (2 ways)

A

Revenue penalties are mitigated where:
1. Full co-operation
2. Qualifying disclosure

49
Q

What constitutes full co-operation with Revenue? (5 actions)

A

Full co-operation includes:
1. Having all books & records available
2. Having appropriate personnel available
3. Responding promptly to all requests
4. Responding promptly to all correspondence
5. Prompt payment of the settlement liability

50
Q

What is a qualifying disclosure?

A

A qualifying disclosure is information you give to Revenue if you:
1. Have not reported all of your income/gains
2. Made an error on your tax return

51
Q

What are the benefits of making a qualifying disclosure? (3 benefits)

A
  1. Non-publication in the list of tax defaulters
  2. No prosecution
  3. Further mitigation of penalties
52
Q

What is an unprompted qualifying disclosure?

A

An unprompted disclosure is one made before the taxpayer is notified of Revenue’s intention to commence any Level 2 or Level 3 compliance interventions.

53
Q

What is a prompted qualifying disclosure?

A

A prompted disclosure is one made in the period between the date which the taxpayer is notified by Revenue that a Level 2 compliance intervention will start, and the commencement of that intervention.

54
Q

What happens when a taxpayer gives Revenue a “Notice of Intention”? (4 action items)

A

They will have 60 days to:
1. Prepare and make a qualifying disclosure
2. Discuss any matters with Revenue
3. Quantify the shortfall and to make relevant payment
4. Discuss category of default and mitigated penalty

55
Q

What is the required format for a qualifying disclosure? (4 points)

A
  1. Must be made in writing and signed
  2. Declaration that the disclosure is correct and complete
  3. State all liabilities to tax, interest, and penalties, previously undisclosed
  4. Payment of the tax and interest (but not the penalty at this point)
56
Q

What is tax planning?

A

Tax planning involves reducing the tax bill by using provisions in tax legislation.

It is legal and ethically acceptable.

57
Q

What is tax avoidance?

A

Tax avoidance involves reducing the tax bill using loopholes in tax legislation.

It is Legal but NOT ethically acceptable

58
Q

What is tax evasion?

A

Tax evasion involves reducing the tax bill by deliberately breaking the law.

It is not legal and not ethically acceptable. Tax evasion is a
criminal offense.

The error will generally fall into the “deliberate behavior” category of default.

59
Q

How does legislation counteract tax avoidance? (4 ways)

A
  1. General anti-avoidance legislation counteracts these transactions.
  2. Mandatory Disclosure Regime requires taxpayers/advisors to inform Revenue of schemes designed for a tax advantage.
  3. Penalties apply for advisers who do not comply.
  4. Successfully challenged tax avoidance results in the original tax saving being paid plus interest and penalties.
60
Q

What are some examples of Tax Evasion? (7 examples)

A
  1. Failure to file a tax return
  2. Failure to pay the relevant tax
  3. Failure to declare the correct income
  4. Deliberately inflating expenses
  5. Hiding taxable assets
  6. Wrongly claiming a tax refund
  7. Not operating PAYE for employees/pensioners

Tax (18 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions