Module 1

Question 1

What is the main objective of the UK tax system?

Answer 1

Raise revenue to financial public expenditure

Question 2

What is a budget deficit?

Answer 2

When government spending is more then tax collected

Question 3

What is a budget surplus?

Answer 3

When tax collected is more than government spending

Question 4

Aside from financing public spending, what else can taxes be used to do?

Answer 4

Redistribute income or wealth - Robin Hood

Economic growth and encouragement of certain sectors - tax cut, more money to spend

Encouraging certain behaviour - sugar tax, solar panels

Question 5

What are the canons of taxation?

Answer 5

Equality- should be fair, linked to ability to pay
Certainty- understand the tax
Convenience- easy to pay
Efficiency- minimise costs, max revenue

Question 6

Who set up the canons of taxation?

Answer 6

Adam Smith

18th century economist

Question 7

What is progressive tax?

Answer 7

Rich pay higher %

E.g income tax

Question 8

What is regressive tax?

Answer 8

Rich pay lower %, poor bit harder

E.g national insurance

Question 9

What is proportional tax?

Answer 9

All pay the same

E.g VAT

Question 10

What is the fiscal year?

Answer 10

6th April - 5th April

Individuals

Question 11

What is the financial year?

Answer 11

1 April - 31 March

Companies

Question 12

When is the annual budget announced? And when does it come into effect

Answer 12

November/December

The following April

Question 13

Who delivers the budget each year?

Answer 13

Chancellor of the Exchequer

Question 14

What does HMRC do?

Answer 14

Include:
National insurance contributions
Enforcement of minimum and national living wages
Collection of student loan repayments
Administration of tax credits and child benefit

Question 15

What are the four operational groups of HMRC?

Answer 15

Personal tax
Benefits and credits
Business tax
Customer compliance

Question 16

What is the Tax Self-Assessment System?

Answer 16

Taxpayer must calculate tax due themselves and submit the info to back up the figures

Expected to make prompt payment

Question 17

What are the three key areas is the tax framework?

Answer 17

Assessment
Appeals
Enquiries

Question 18

When should be self-assessment tax return be filed with HMRC?

Answer 18

31 October is a paper return is used

31 January if online

Question 19

When is the online self-assessment tax return due?

Answer 19

31 January

Question 20

When is the paper self-assessment tax return due?

Answer 20

31 October

Question 21

When is the tax liability paid?

Answer 21

Same day it is filed

Must be by 31 Jan

Question 22

What does PAYE stand for?

Answer 22

Pay As You Earn

Tax dealt with at source, e.g taken out of salary before given any money

Question 23

What is an assessment for tax payable?

Answer 23

Issued if an element of income has been omitted

Question 24

How long is the time limit for assessments for tax payable?

Answer 24

6 years from end of tax year

Where deliberate action led to it, time limit extended to 20 years

Question 25

When can an appeal be made?

Answer 25

Within 30 days of the amendment or assessment

Question 26

If the appeal can’t be settled what is it taken to?

Answer 26

Independent tax tribunal - first tier tribunal - upper tribunal - court of appeal - Supreme Court ^order of escalation

Question 27

Can only appeal on

Answer 27

A point of law

Question 28

Where will an appeal be heard in Scotland?

Answer 28

Court of session then to Supreme Court

Question 29

Appeals lastly move t

Answer 29

Supreme Court

Question 30

HMRC doesn’t need any grounds for an?

Answer 30

Enquiry

Question 31

What is an aspect enquiry?

Answer 31

Investigating one particular area of a taxpayers return

Question 32

What is a full enquiry?

Answer 32

Will look at all the information in a return

Question 33

When must written notice of the intention to inquire be given by?

Answer 33

- the end of the period 12 months after the actual receipt of a return by HMRC for a return filed on time - If filed after due filing date, the quarter day following the first anniversary of the actual filing date

Question 34

When must the intention to enquire be given if a tax return was filed on time?

Answer 34

End of period 12 months after the actual receipt of the return

Question 35

When must the intention to enquire be given if a tax return was filed late?

Answer 35

The quarter day following the first anniversary of the actual filing date

Question 36

What are the quarter dates?

Answer 36

31 January 30 April 31 July 31 October

Question 37

How to end an enquiry? Why enquiries selected?

Answer 37

By showing information to their satisfaction Not possible to appeal against an enquiry HMRC doesn’t have to justify the reason, can be random selection

Question 38

How can an enquiry be settled?

Answer 38

Agreement between HMRC and taxpayer that an amendment will be made If can’t be reached the appeals proceeds will follow

Question 39

Tax penalties are?

Answer 39

In the rates papers

Question 40

When is an action careless?

Answer 40

Must have reasonable belief that the information they are providing is accurate

Question 41

Penalties are

Answer 41

Cumulative

Question 42

How to bring penalties down?

Answer 42

Seen as being cooperative

Question 43

Penalties are common besides which types of tax?

Answer 43

VAT | Stamp duty

Question 44

What is the difference between Tax planning, avoidance and evasion

Answer 44

Tax planning is legal Tax avoidance is legal but controversial? Tax evasion is illegal

Question 45

What does GAAR guidance state?

Answer 45

Taxation is not to be treated as a game where taxpayers can indulge in any ingenious scheme in order to eliminate or reduce their tax liability

Question 46

What does DOTAS stand for?

Answer 46

Disclosure of Tax Avoidance Schemes

Question 47

What does DOTAS rules mean?

Answer 47

HMRC receives notice of planning schemes

Question 48

What is direct tax?9

Answer 48

Charged on income

Question 49

What is indirect tax?

Answer 49

Charged on expenditure