Tax Compliance And Self Assesment Flashcards
How does hmrc collect annual direct taxes
Done via self assessment for taxpayers who have some complexity in their returns
Deduction from source under PAYE
Who has to do self assessment
Self employed
Company directors
Property tax or investment tax
People with child benefit tax charge
What is the date for tax return done online
31 jan following following the tax year it relates to
Deadline for tax return on paper
31 October following the tax year it relates to
Tax deadline under paye
Person can have balance of less then 3000 collected via paye code of a latter year if return online by 30 December and if done by paper by 31 October
How does payment on account work
First payment done on 31 jan of tax year concerned
Second on 31 July after end of tax year concerned
Each payment on acc is based on half the previous years income tax
Don’t have to make payments on account if tax payable in preceding year is less than 1000
What is balancing payment
This is due on the following 31 jan
It’s the adjusted call by comparing the actual tax for the year and what’s been paid
What are the interest and penalties to late tax payment to hmrc
Charged on late payments Interest is linked to libor Charged on date tax was due 5% on lateness over 30 days Another 5% is 6 months late Another 5% if another 6 months late £100 penalty is not submitted by 31 jan 10 daily charge if 3 months late for a max of 90 days
How does paye work
Done by giving a code to an employee
Has a letter and a number that tells the employer the amount of tax free income the person is entitled to
Number is arrived by adding all allowances and allowable expenses, then deducting taxable benefits that have not been payrolled
What is RTI
Known as real time information where the info is sent to hmrc electronically each time the person gets paid
What are the employers responsibility under paye
Deduct correct nics and income tax
Report details to hmrc and pay them
What are the month end procedures for employer to do for employee
Begins 6th of Callander month and ends 5th of following month
By 22nd or 19th if done electronically following the end of each tax month, they must pay hmrc all the money owed
What is the year end procedure employer has to do for employee
With rti no procedure needed however
Expenses and benefits in kind have to be sent to hmrc
Both form p11d and p11db should be completed and sent to hmrc
Should be done by 6th July
Difference between tax mitigation and evasion
Mitigation is reducing tax as much as possible via legal ways and evasion is not paying any tax owed to hmrc or using schemes where hmrc don’t know the full extent of tax owed
What 2 initiatives are hmrc currently running and what is the point of them
Credit card sales campaign: aimed at those that tax payments via card and don’t declare them
Let property campaign: those that owe tax or rental income
Both are designed to reduce the penealties that people will face
