Osborne 1 - Introduction to Business Taxation

Question 1

Income tax - tax years - dates & name of year we are in?

Corporation tax - financial years - dates & name?

Answer 1

6/4/21 - 5/4/22 = TY 21/22 (also known as fiscal years)

1/4/21 - 31/3/22 = FY 21 (Most of year falls in 21)

Question 2

Company must submit

How many CT600 per AP &

Answer 2

Company must submit a CT600 for each Chargeable Accounting Period.

CT600 relates to company’s CAP not HMRC Financial year (unlike Income tax SA return). However if there was change of CT% this would be apportioned according to HMRC FY

Submit CT600 12 months after end of Accounting period from which CAP derived (so could be more than 12 months from end of CAP if the Accounting period is > 1 year)

So 2 CT600s might be due for company’s accounting period but the 2 CT600s are due at the same time.
PAYMENT however is due 9m1d after CAP..

So if have Co.Acc.Per 15m:

• CAP 1 is first 12m & payment due 9.1d after this.
• CAP 2 is remaining 3m & payment due 9m1d after this.
• 2 CT600s due both 12m after end of Co.Acc.Per (ie. end of 2nd CAP)

Question 3

Not that the term “accounting period” (AP) can also be used to describe a Chargeable accounting period (CAP)

AAT ref material takes this approach!

Answer 3

.

Question 4

Avoidance schemes

My CPD mnemonic

Answer 4

HMRC has stated if scheme involves:

Misrepresentation (of true facts)
Concealment
Pretense
Non-Disclosure

Then its illegal tax evasion

Question 5

HMRC way of preventing ‘aggressive’ tax avoidance schemes

Answer 5

Tax avoidance schemes MUST BE DISCLOSED who then investigate to ensure legal.

Using a tax avoidance scheme marks individual as HIGH RISK… leading to close scrutiny of ALL tax affairs not just those to do with the scheme.

2013 GAAR legislation introduced. (General Anti abuse rule)
Rejects old approach of courts that taxpayers free to use ingenuity to reduce tax however contrived.

Key to using legal tax avoidance measures is to only use tax rules AS THEY WERE INTENDED (ISAs)

Question 6

Money laundering includes

Answer 6

any process of concealing or disguising the proceeds of any criminal offense, including tax evasion.

So not declaring income is not really money laundering but concealing or disguising the proceeds is.

So if client is refusing to declare some income but not concealing it you can just resign (& inform HMRC you no longer act) but if they are actually ‘concealing or disguising’ the income then its ML & you must report to MLRO or NCA. (& not warn client which is an offense)

Question 7

(in admin sections of ref mat)
How long keep records?
HMRC enquiry deadline?
Penalties for incorrect returns?

Answer 7

Companies -
records - 6 years from END of accounting period.
(£3K per ap)
enquiry - 12 months from SUBMISSION
incorrect ret’n - Same as individ. (use same table in ref)

Individuals IN BUSINESS (STs & P’ships)-
Records - 5 years from FILING date. (£3K per ty)
enquiry - 12 months from SUBMISSION date
Incorrect ret’n - See Admin section of ref material

Question 8

TTP (Taxable total profits) previously known as

Answer 8

PCTCT

Profits chargeable to Corporation Tax

Question 9

The ‘BASIS OF ASSESSMENT’ for TRADING PROFITS is the Tax-Adjusted profits of the Chargeable Accounting Period

Answer 9

Th only income is Trading Income.

The only expenditure is Allowable Trading Expenditure