1. Tax system

Question 1

What is the main difference between tax avoidance and tax evasion?

What are the two most common forms of tax evasion?

Answer 1

Tax avoidance is a legal means of reducing tax

WHEREAS

tax evasion is illegally reducing tax.

Tax evasion is most commonly done by:

a) omitting information
b) submitting false information

Question 2

What are the components of the ACCA Professional Code of Ethics and Conduct? (5)

Answer 2

• Integrity
• Objectivity
• Confidentiality
• Professional competence and due care
• Professional behaviour

Question 3

In which ways does the EU influence UK Tax? (4)

Answer 3

• Directives
• Trade barriers
• VAT policies
• EU Courts

Question 4

What should a tax agent do when they discover a tax irregularity? (4)

Answer 4

• Determine if deliberate or mistake
• Discuss with client error and punishment if not declared to HMRC.
• If client refuses to fully disclose to HMRC, agent must cease working for them and inform HMRC (can’t tell HMRC why because of disclosure)
• Check money laundering legislation for further action needed.

Question 5

Explain the money laundering regulations (3)

Answer 5

• Relates to offences hiding criminal money
• Money Laundering Reporting Officer decided if should be reported to National Crime Agency
• Cannot tell client: known as tipping off.

Question 6

Explain the punishments for dishonest tax agents (2)

Answer 6

• Fines up to £50,000

- Penalty above £5,000 - HMRC can publish court reports.