Introduction to UK Tax System (2)

Question 1

When does tax year run?

Answer 1

6th April to 5th April

Question 2

What is a tax year?

Answer 2

Period in which individuals submit returns and pay tax

Question 3

Where does the financial year run?

Answer 3

1 April to 31 March

Question 4

How are corporation tax rates and rules set?

Answer 4

For financial years

Question 5

What are the sources of revenue law practice?

Answer 5

Statements of practice which set out how HMRC intends to apply the law

Internal manuals used by HMRC staff

Question 6

What is tax planning?

Answer 6

Reduction in an individual’s or company’s tax liabilities in accordance with tax legislation such as claiming capital allowance on machinery

Question 7

What is tax avoidance?

Answer 7

Legal minimisation of tax liabilities

Question 8

What is tax evasion?

Answer 8

Seeking to mislead HMRC by either suppressing info or providing deliberaly false information

Question 9

WHat does GAAR provide?

Answer 9

means for HMRC to counteract tax advantages from abusive tax arrangements

Question 10

What do abusive tax arrangements involve?

Answer 10

Obtaining tax advantage as one of their main purposes

Question 11

WHat does a tax advantage include?

Answer 11

Relief from or reduction in tax charged, repayment of tax, deferral of tax payment or acceleration of payment

Question 12

How may HMRC counteract tax advantages?

Answer 12

By increasing the taxpayer’s tax liability

Question 13

What must a practicing accountant act for?

Answer 13

Taxpayers in their dealings with HMRC

Question 14

What must HMRC use?

Answer 14

Professional judgement and uphold standards of ACCA

Question 15

An accountant who suspects tax evasion?

Answer 15

Must report their suspicions

Question 16

What are double taxation agreements designed for?

Answer 16

Protecting against risk of double taxation where same income or gains are taxable in two countries

Question 17

How do these rules from double taxation give relief by?

Answer 17

Taxing the source only in one country

Giving credit for tax paid in one country against tax in another country

Question 18

What can a double taxation agreement also include?

Answer 18

Non-discrimination provisions for a foreign naitonal’s treatment

Question 19

Exchange of information in double taxation agreement

Answer 19

Include rules for exchange of information between revenue authorities