UK tax systems

Question 1

Types of tax - who is it relating to (suffered)

Income tax
National insurance
Capital Gains 
Inheritance tax 
Corporation tax
VAT

Answer 1

Income tax - employees, sole traders, partners in a partnership, unemployed, retired

National insurance - Employees, self-employed, employers

Capital Gains - Individuals

Inheritance tax - Individuals

Corporation tax - Companies

VAT - Consumer, collected by businesses

Question 2

Indirect v direct tax

Answer 2

Indirect - when tax is collected by an intermediary (like VAT on purchases)

Direct - collected from you by HMRC

Question 3

Accountant responsibility

Answer 3

Responsibility of an accountant who learns of a material error or omission in a clients tax return, or the failure to file, to advise the client and recommend disclosure to HMRC.

If client fails to correct error the accountant must: cease to act, inform HMRC that they no longer act (not of why they left), make a money laundering report to the MLRO (internally). The MLRO must then decide if that should go to the national crime agency

Question 4

Dishonest conduct of tax agent

Answer 4

Civil penalty of up to £50K
If it exceeds £5K, HMRC can publish details of agent
With agreement of the Tax Tribunal, HMRC can access the working papers of an agent

Question 5

Residence

Automatic non-UK resident during the year

Answer 5

In the UK for less than 16 days, or
46 days and not been resident during the 3 prior years, or
91 days of which fewer than 31 days were working in the UK and they work full time overseas

Question 6

Residence

Automatic UK resident during the year

Answer 6

In the UK for 183 days or more, or
Only home in the UK, or
Works full-time in the UK and more than 75% of working days are in the UK

Question 7

Residence

Sufficient test

Answer 7

Only if the automatic test are not applicable

Amount of ties needed is from table given in the exam (prior resident = within the last 3 years)

Ties:
Close family in the UK (spouse, minor child)
UK accommodation (spends at least 1 night a year)
Substantive work (3 hours or more on 40 or more days in the year)
Being in the UK for me than 90 days during either or both of the 2 prior tax years

If leaving 1 further tie:
Spending more time in the UK than in any other country during the tax year