Module 7 Income tax administration Flashcards
What is the time limit on notice of chargeability
Within 6 months of the end of the fiscal year
How long do tax records need to be kept for?
5 years for businesses after 31 January following the fiscal year (31 January 2026 for 2019/20)
1 year for individuals (31 January 2020 for 2019/20)
When can amendments of returns be made?
Within 12 months of the final due filing date of 31 January (Not the actual filing date used by the taxpayer)
If an overpayment of tax is discovered outside of time limit for amending the return what can be done?
A claim for relief for the overpaid tax can be made by the taxpayer and they have 4 years from the end of the relevant tax year.
What is Payment on Account
HMRC will collect instalments of income tax and class 4 NIC based on the previous years liability (first two payments)
31 January in fiscal year = 1st payment
31 July following the end of fiscal year = 2nd payment
31 January following the end of fiscal year = final payment
Class 2 NIC and capital gains tax do not have payments on account
When is payment on account not required?
When the relevant amount is below £1000 or when taxpayer paid 80% or more of their tax liability through PAYE or deducation at source
What is the penalty of tax evasion
Maximum 7 years in prison, unlimited fine or both.
When is payment on account required?
POA are usually required where the income tax and class 4 NICs due in the previous year exceeded the amount of income tax deducted at source. This excess is known as the relevant amount.
What actions can HMRC take regarding enforcement and collection?
HMRC may instigate criminal proceedings or civil proceedingsto recover unpaid tax from taxpayers.
Civil - Summary warrant in Scotland (distraint in England and Wales) HMRC seizes a taxpayer’s possessions and sell them to settle the debt owed by the taxpayer and court proceedings.
HMRC can also apply for squestration in Scotland (bankruptcy in England and Wales) of an individual
