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BPP TAX > Module 1 > Flashcards

Module 1 Flashcards

1
Q

What is the main objective of the UK tax system?

A

Raise revenue to financial public expenditure

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2
Q

What is a budget deficit?

A

When government spending is more then tax collected

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3
Q

What is a budget surplus?

A

When tax collected is more than government spending

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4
Q

Aside from financing public spending, what else can taxes be used to do?

A

Redistribute income or wealth - Robin Hood

Economic growth and encouragement of certain sectors - tax cut, more money to spend

Encouraging certain behaviour - sugar tax, solar panels

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5
Q

What are the canons of taxation?

A

Equality- should be fair, linked to ability to pay
Certainty- understand the tax
Convenience- easy to pay
Efficiency- minimise costs, max revenue

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6
Q

Who set up the canons of taxation?

A

Adam Smith

18th century economist

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7
Q

What is progressive tax?

A

Rich pay higher %

E.g income tax

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8
Q

What is regressive tax?

A

Rich pay lower %, poor bit harder

E.g national insurance

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9
Q

What is proportional tax?

A

All pay the same

E.g VAT

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10
Q

What is the fiscal year?

A

6th April - 5th April

Individuals

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11
Q

What is the financial year?

A

1 April - 31 March

Companies

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12
Q

When is the annual budget announced? And when does it come into effect

A

November/December

The following April

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13
Q

Who delivers the budget each year?

A

Chancellor of the Exchequer

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14
Q

What does HMRC do?

A

Include:
National insurance contributions
Enforcement of minimum and national living wages
Collection of student loan repayments
Administration of tax credits and child benefit

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15
Q

What are the four operational groups of HMRC?

A

Personal tax
Benefits and credits
Business tax
Customer compliance

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16
Q

What is the Tax Self-Assessment System?

A

Taxpayer must calculate tax due themselves and submit the info to back up the figures

Expected to make prompt payment

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17
Q

What are the three key areas is the tax framework?

A

Assessment
Appeals
Enquiries

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18
Q

When should be self-assessment tax return be filed with HMRC?

A

31 October is a paper return is used

31 January if online

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19
Q

When is the online self-assessment tax return due?

A

31 January

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20
Q

When is the paper self-assessment tax return due?

A

31 October

21
Q

When is the tax liability paid?

A

Same day it is filed

Must be by 31 Jan

22
Q

What does PAYE stand for?

A

Pay As You Earn

Tax dealt with at source, e.g taken out of salary before given any money

23
Q

What is an assessment for tax payable?

A

Issued if an element of income has been omitted

24
Q

How long is the time limit for assessments for tax payable?

A

6 years from end of tax year

Where deliberate action led to it, time limit extended to 20 years

25
Q

When can an appeal be made?

A

Within 30 days of the amendment or assessment

26
Q

If the appeal can’t be settled what is it taken to?

A

Independent tax tribunal

  • first tier tribunal
  • upper tribunal
  • court of appeal
  • Supreme Court

^order of escalation

27
Q

Can only appeal on

A

A point of law

28
Q

Where will an appeal be heard in Scotland?

A

Court of session then to Supreme Court

29
Q

Appeals lastly move t

A

Supreme Court

30
Q

HMRC doesn’t need any grounds for an?

A

Enquiry

31
Q

What is an aspect enquiry?

A

Investigating one particular area of a taxpayers return

32
Q

What is a full enquiry?

A

Will look at all the information in a return

33
Q

When must written notice of the intention to inquire be given by?

A
  • the end of the period 12 months after the actual receipt of a return by HMRC for a return filed on time
  • If filed after due filing date, the quarter day following the first anniversary of the actual filing date
34
Q

When must the intention to enquire be given if a tax return was filed on time?

A

End of period 12 months after the actual receipt of the return

35
Q

When must the intention to enquire be given if a tax return was filed late?

A

The quarter day following the first anniversary of the actual filing date

36
Q

What are the quarter dates?

A

31 January
30 April
31 July
31 October

37
Q

How to end an enquiry? Why enquiries selected?

A

By showing information to their satisfaction

Not possible to appeal against an enquiry

HMRC doesn’t have to justify the reason, can be random selection

38
Q

How can an enquiry be settled?

A

Agreement between HMRC and taxpayer that an amendment will be made

If can’t be reached the appeals proceeds will follow

39
Q

Tax penalties are?

A

In the rates papers

40
Q

When is an action careless?

A

Must have reasonable belief that the information they are providing is accurate

41
Q

Penalties are

A

Cumulative

42
Q

How to bring penalties down?

A

Seen as being cooperative

43
Q

Penalties are common besides which types of tax?

A

VAT

Stamp duty

44
Q

What is the difference between Tax planning, avoidance and evasion

A

Tax planning is legal
Tax avoidance is legal but controversial?
Tax evasion is illegal

45
Q

What does GAAR guidance state?

A

Taxation is not to be treated as a game where taxpayers can indulge in any ingenious scheme in order to eliminate or reduce their tax liability

46
Q

What does DOTAS stand for?

A

Disclosure of Tax Avoidance Schemes

47
Q

What does DOTAS rules mean?

A

HMRC receives notice of planning schemes

48
Q

What is direct tax?9

A

Charged on income

49
Q

What is indirect tax?

A

Charged on expenditure

BPP TAX (8 decks)

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