Personal Tax

Question 1

Equitable System Meaning

Answer 1

Fair system
Earn more - pay more tax

Question 2

What Makes A Good Tax System?

Answer 2

Fair
Absolute
Convenient
Efficient

Question 3

What Is Direct Tax?

Answer 3

Tax paid to HMRC directly (PAYE on wages)
You know you are paying it

Question 4

What is Indirect Tax?

Answer 4

Tax paid by yourself, but paid to HMRC by someone else
e.g VAT
Don’t think about it happening

Question 5

What Is The Regressive Tax Rate Structure?

Answer 5

The more you earn, the less tax you pay
e.g. National Insurance

Question 5

What Are The Tax Rate Structures?

Answer 5

Progressive
Proportional
Regressive

Question 5

What Is The Progressive Tax Rate Structure?

Answer 5

Tax increases as income increases
e.g. income tax

Question 5

What Is The Proportional Tax Rate Structure?

Answer 5

Same proportion of tax regardless of income
e.g. VAT at 20%

Question 5

What Is The Regressive Tax Rate Structure?

Answer 5

Opposite to progressive
The more you earn, the less tax you pay
e.g. National Insurance

Question 5

What Are The Ethical Principles?

Answer 5

Integrity - Honesty
Objectivity - No bias
Confidentiality
Professional Behaviour - Not bringing the profession into disrepute
Professional Competence & Due Care - Got the skills to do the job

Question 6

When Can Confidentiality Be Overridden?

Answer 6

Authority given by client
Legal or professional duty - e.g. money laundering suspicion

Question 6

What To Do If There Is An Error In A Clients Return?

Answer 6

Recommend that the client informs HMRC
If the client refuses - Do not act for them in connection with that return

Question 6

What Are The Tax Traffic Lights?

Answer 6

Tax Planning - legal use of legislation to minimise tax bills - legal & ethical
Tax Avoidance - legal use of legislation but not following intent of the law (using loopholes) - legal & unethical
Tax Evasion - Illegal ways to pay less tax (e.g. hiding income)