Personal tax Flashcards
(37 cards)
What is the minimum the MCA can be reduced to?
£4010 - then 10% tax reducer applier
Notification period for individual first becoming chargeable to tax?
Notify HMRC within 6m of the end of the tax year in which they become chargeable.
How is a penalty imposed for failure to notify?
Based on behaviour and potential lost revenue - amount of income tax (inc C4 NICs and CGT unpaid) as a result of failure @ 100% / 70% / 30%.
Time limit for submitting electronic return v paper return?
Electronic - 31 January following tax year or 3m after notice to file issues (if later);
Paper 31 October following tax year or 3m after notice to file if later (2m if HMRC are to calculate tax).
Period for HMRC / taxpayer amendment of return?
Within 9m of date of receipt for HMRC / within 12m of normal filing date TP
What principle is established in Pepper v Hart?
The taxable value of an employer-provided benefit is based on the marginal cost incurred, rather than a proportion of the full cost.
E.g. (difference between total standard cost and additional cost).
What is an optional renumeration scheme?
Applies to two types of arrangement, including salary sacrifice. It limits the tax and NICs savings by taxing the higher of the cash amount given up and the taxable benefit per the benefit rules.
Exemptions include contrib to pension schemes, bikes, and cars with low CO2 emissions.
What is a PSA?
Formal agreement between HMRC and employer to settle employee liability on minor/irregular benefits or expenses; or where impractical to apportion the benefits shared between employees. E.g. staff entertaining exceeding £150.
Cases relating to deductible v non-deductible subscription fees (Gentleman’s club):
Brown v Bullock - non-deductible since didn’t relate wholly to employment, even though some business was won by attending.
Elwood v Utitz - deductible since membership gave access to cheaper accommodation for business purposes which was the only reason of the membership.
Difference between P60, P11D and P45
P60: shows total tax and NICs paid, given to employee at the end of each tax year by 31 May. Includes payrolled benefits.
P11D: shows the benefits provided and tax paid (not payrolled). Must give cash equivalent and given to employee/HMRC by 6 July.
P45: given to employee at the end of the employment, shows tax-in year, tax code, and a bit to give their new employer.
Factors required for contract of service? And case name
Ready Mixed Concrete case
Factors are: mutuality of obligation, wage paid to the worker, personal service and control
Factors to be considered in determining employee v self-employed (as part of economic reality test)?
degree of integration, provision of own equipment, number and length of engagements, financial risk
Legislation for self-employed individual?
Largely ITTOIA 2005
Autoclenz v Belcher case
Courts can ignore the written terms of contract and look at the ‘true’ contract i.e. the facts at hand and behaviour in practice.
Case showed that the workers were employees because there was a mutuality of obligation and personal service did have to be performed.
Case for the test of ‘control’ and ‘equipment’ in determining employment status
Market Investigations v Minister of Social Security
- own desk, reporting manager, control hours/deadlines,
- provided with own equipment (although not decisive as in hall v lorimer where specialist equipment was provided)
Hall v Lorimer case:
Important to look at all the facts, not just isolate one requirement (provision of equipment)
In this case, the fact that H could send a substitute was particularly powerful. Also had number of engagements with diff employers and own insurance.
What are the requirements for a ‘small’ company or partnership for purposes of IR35?
Annual turnover less than 10.2m
Balance sheet not exceeding 5.1m
Average of less than 50 employees.
What it a share option?
The right to acquire an asset in a given time window (asset being shares in employers company)
What are the 4 types of shares available under a SIP? and brief implications of each
Free shares - no income tax / NICs
Partnership shares - purchased shares that obtain tax relief on purchase
Matching shares - extra shares resulting from partnership shares
Dividend shares - re-investing dividends to purchase additional shares
What is a readily convertible asset?
Shares tradeable on a recognised stock exchange - includes quoted shares and gold bullion.
Shares in private company are NOT RCA if they are not in the process of being sold (valued).
Assets for which trading arrangements exist (employee could sell for cash arranged)
What is P60?
Shows total pay and tax details for the year.
Given to an employee at the end by 31 May following end of tax year.
Date for PAYE and NICs paid through PAYE for employers? Class 1A NICs date?
Electronic - 22nd of the following tax month
Class 1A NICs: 22nd July following end of tax year (unless payrolled)
Date to notify taxable benefits reported on P11D in respect of employees?
6 July following end of tax year
Impact of payrolling taxable benefits?
Do not need to report on Form 11D, but included through PAYE system.
