Module 1 Introduction to Taxation Flashcards
What is the main objective of UK tax System?
To raise revenue to finance public expenditure
What are the four canons of Taxation?
Equity
Certainty
Convenience
Efficiency
What are direct taxes?
Direct taxes are charged on income
Income tax Corporation tax Capital gains tax Inheritance tax Petroleum revenue tax
What are indirect taxes?
Indirect taxes are charged on expenditure Value Added Tax Stamp tax Insurance premium tax Airport Passenger Tax Soft drinks industry levy
When does the Fiscal (Tax) Year run from?
6th April 20X1 to the 5th April 20X2
When the Finance bill becomes the Finance Act, it becomes legally binding? True or False?
True
What is the board of HMRC comprised of?
Non Executive and Executive members (no direct political oversight, senior civil servants)
HMRC Personnel are called what?
Officer of the Board
What does the self assessment system of tax mean?
Taxpayers are responsible for:
Working out their own tax
Notifying HMRC
Paying the tax on time
The personal self-assessment tax return should be filed with HMRC by?
31st January after the end of the fiscal year if ONLINE
31st October after the end of the fiscal year if PAPER
What is the deadline for individual to pay their tax liability?
31 January following the fiscal year
HMRC may inssue an assessment for tax payable, why?
Taxpayer careless - 6 years from end of tax year
Deliberate action - 20 years from end of tax year
What can taxpayers appeal against under the self assessment system?
HMRC generated assessments
HMRC amendments to self assessments
Disallowance by HMRC of any claim made in a return
What is the order of court for appeals?
1 - First Tier Tribunal
2 - Upper Tribunal (points of law only)
3 - Scotland - Court of Session / England Wales - Court of Appeal
4 - Supreme Court
What are the two types of enquiry HMRC can make?
Aspect Enquiry - Investigating one particular area
Full Enquiry - Full investigation
Time limit for HMRC to open an enquiry?
12 months after the actual receipt of a return if it is filed ON TIME
The quarter day following the first anniversary of the actual filing date (31 January, 30 April, 31 July, 31 October) if late
Is Tax Evasion / Tax Planning / Tax Avoidance legal?
Tax Evasion - Illegal and a criminal offence
Tax Planning - Legal
Tax Avoidance - A grey area
Why was sugar tax levy introduced?
The levy was introduced in 2018 and was earmarked to fund sport in primary schools to help with childhood obesity
Who is responsible for setting the tax policy in UK?
HM Treasury is the government department which is responsible for setting tax legislation
What does the HMRC do?
Responsible for administering the tax system and ensuring that the right amount of tax is collected each year
Who needs to keep digital tax records?
Business and Landlords with annual turnover above the VAT registration threshold (currently £85,000)
The upper tribunal will only hear cases from the first tier on points of law, what is the exception?
The exception is if the case is complex then they will hear it in first instance.
The alternative dispute resolution programme is available to who?
Individuals and SMEs. The tribunal route remains open for use and taxpayer does not need to use the ADR process.
What must be issued after an enquiry is completed (agreement reached)?
A closure notice by the HMRC
Disclosure of Tax Avoidance Schemes (DOTAS)
Tax advisors are required to register with HMRC any tax avoidance schemes they promote to clients
Disclose within 5 days
