6 - Tax compliance and self assessment Flashcards
(36 cards)
If a person has not been notified to complete a tax return, by when should they notify HMRC of any chargeability?
5th October after the end of the tax year in question
By what date should a paper return be filed?
31st October
If a PAYE individual has a payment of less than £3000 to make, by when should they file their return to have the tax collected by PAYE?
30th December, online
31st October, paper
For payments on account in respect of income tax and class 4 NIC’s, when are the due dates?
31st Jan within the current tax year
31st July after tax year end
31st Jan after tax year end
On what are payments on account based?
Half the previous tax year's income tax payable - over and above that deducted at source Include class 4 NIC's and child benefit tax income
When would a payment on account not be required?
If amount paid in the previous year was under £1,000
If 80% of the tax payable in the previous year was at source or PAYE
Why might a person claim a reduction in payments on account?
If they suspect it may result in over-payment such as:
Lower Income
Higher deductions
Higher proportion deducted at source
What is the process for relief claims for previous years?
Calculated as if it were given in the previous year, however given as a repayment in the year in which the claim arises
They do not reassess a previous year and reduce payments on account for the current year.
When is interest charged by HMRC for late payment?
From the date the tax was due - i.e. 31st Jan/31st July
5% penalty for any tax remaining unpaid after the balancing payment is due
After 5 months, a further 5% penalty is charged, and again after 6 months
What are the penalties for a late return?
£100 after 31st Jan
£10 daily for a maximum of 90 days
If more than six months late, £300 or 5% of the tax outstanding
At 12 months, a higher penalty is charged if the lack of return is deliberate
In addition to late return and interest, what other penalties are levied by the HMRC?
Errors which are careless, deliberate and concealed
Failing to notify of a liability by 5th October
what time limit does HMRC have to start a compliance check?
within twelve months of the date they receive the return
After this period, only if they suspect fraud, negligence or conduct issues, insufficient information provided that might suggest the return is not accurate
When must an employer run their payroll system and report to the HMRC?
Each time an employee is paid - either before or at the time
What is the benefit of an employer putting benefits in kind through payroll?
They do not need to be reported on a P11D at the end of the tax year
Which benefits in kind cannot be pay-rolled?
Living accommodation
Interest free and low interest loans
What has to be paid to HMRC and when by employers on a monthly basis?
Tax and NIC’s from employees
Employers NIC’s
Student loan deductions collected
22nd day if paying electronically
19th if not
What year end tax submissions does an employer need to make?
P11D for each employee with taxable benefits or expenses (unless already pay-rolled)
P11D(b) with NIC’s due on the above
Due by 6th July
What are the penalties for late submission of monthly information for an employer and late payment?
None for first month
£100 and £400 depending on number of employees
5% if three months late
1% for late payment 5% if more than 6 months late 5% of still not paid after 12 months Interest on a daily basis Additional charges for inaccurate information
What is the time limit for HMRC to be able to investigate off-shore non tax compliance?
12 years
What are the key elements of the HMRC ‘no safe havens’ strategy?
Leading international collaboration between tax authorities
Assisting compliance
Responding appropriately
What type of person might be targeted by the Affluent Compliance Team?
Top rate tax payers or assets over £1M, including:
Using avoidance schemes
A low effective rates across total income
Bank accounts in Switzerland
Understating tax liability
Fail to complete their self assessment on time
Avoid or evade SDLT on purchases
Have UK and offshore property portfolios
What higher penalties are chargeable if disclosure failures relate to overseas matters?
50% higher where the country concerned exchanges information but not automatically
Double the amount where the country concerned does not exchange information
An aggravated penalty of up to 50% applies where taxpayers hide their wealth by diverting assets to more secretive jurisdictions
Under the Criminal Finances Act 2017, what type of offences might companies or partnerships fall foul to?
Criminal tax evasion - deliberate and dishonest
Criminal tax evasion committed by an employee, agent or other persons performing services
The business failed to prevent the person committing the crime
What is legal tax mitigation?
Arranging a legitimate way for a transaction to be processed as to pay the least amount of tax
