Chapter 1 - UK tax system Flashcards
(15 cards)
Define Progressive taxation
As income rises, the amount of tax charged will also rise.
Define Regressive taxation
As income rises, the amount of tax paid falls.
Define proportional taxation
Tax charges remain the same regardless of the amount it is based upon.
List the types of Tax
- Income Tax
- National Insurance Contributions
- Corporation Tax
- Inheritance Tax
- Value Added Tax
- Capital Gains Tax
Define Direct Taxation and provide examples
When the taxpayer pays directly to the HMRC. Examples include:
- Direct Revenue Tax
- Direct Capital Tax
Examples of Direct Revenue Tax
Paid based on income/profits
- Income Tax
- Corporation Tax
Examples of Direct Capital Tax
Paid on the disposal of assets or inheritance.
- Capital Gains Tax
- Inheritance Tax
Define Indirect Taxation and provide examples
Paid by the taxpayer through an intermediary such as a retail shop.
- Value Added Tax (VAT)
Purpose of HMRC
- To ensure the UK public services are well funded with money available
- Help families and individuals with targeted financial support
Purpose of Commissioners
- Implement statute law
- oversee the process of UK tax administration
What is Statute Law
Tax legislation which is updated each year via the annual Finance Act. Statuatory instruments are issued if detailed notes are required.
Case Law
Case law is when decisions are made on cases brought to court regarding tax. It challenges current legislation and these changes are binding. They provide guidance on the laws.
What are forms of HMRC guidance?
- Statement of Practice
- Extra-Statutory Concessions (ESCs)
- Internal HMRC manuals
- HMRC website
- Detailed technical guiddance
What is Tax evasion?
Any action taken to avoid tax by illegal means. Done by:
- suppressing information
- submitting false information
What is Tax Avoidance?
Using the taxing regime to minimise liability also referred to as tax planning.
