F6 Taxation (UK)

Section A: The UK tax system Section B: Income tax liabilities Section C: Chargeable gains Section D: Corporation tax liabilities Section E: Inheritance tax Section F: National insurance contributions Section G: Value Added Tax Section H: The obligations of tax payers and/or their agents Taxation (UK)

Section H: The obligations of tax payers and / or their agents H1: The systems for self-assessment and the making of returns H2: The time limits for the submission of information, claims and payment of tax, including payment on account H3: The procedures relating to enquiries, appeals and disputes H4: Penalties for non-compliance H1: The systems for self-assessment and the making of returns H2: The time limits for the submission of information, claims and payment of tax, including payment on account H3: The procedures relating to enquiries, appeals and disputes H4: Penalties for non-compliance Designed to give you knowledge and application of:

 Explain and apply the features of the self-assessment system as it applies to individuals. [2]  Explain and apply the features of the self-assessment system as it applies to companies. [2] H1: The Systems for Self-Assessment and the Making of Returns Learning outcomes

H2: The Time Limits for the Submission of Information, Claims and Payment of Tax, Including Payments on Account Learning outcomes  Recognise the time limits that apply to the filing of returns and the making of claims. [2]  Recognise the due dates for the payment of tax under the self-assessment system. [2]  Compute payments on account and balancing payments / repayments for individuals. [2]  Explain how large companies are required to account for corporation tax on a quarterly basis. [2]  List the information and records that taxpayers need to retain for tax purposes. [1]

H3: The Procedures Relating to Enquiries, Appeals and Disputes Learning outcomes  Explain the circumstances in which HM Revenue and Customs can enquire into a self- assessment tax return. [2]  Explain the procedures for dealing with appeals and disputes. [1]

H4: Penalties for Non-Compliance Learning outcomes  Calculate interest on overdue tax. [2]  State the penalties that can be charged. [2]

Features of the self-assessment system as it applies to individuals Self-assessment is a process by which taxpayers declare  Taxable income & gains on tax returns  Calculate their income tax, capital gains tax  Class 4 NIC (National Insurance Contribution) as appropriate Chargeability to tax  HMRC sends a notice to the chargeable person  The chargeable person who has not received any notice from HMRC is required to inform HMRC about his tax chargeability by sending a notice (within 6 months from end of the tax year in which the liability arises) Example For the tax year , the notice of chargeability by the individual to HMRC should be given before 5 October 2010 Continued…

Exception: notice to HMRC about person’s chargeability is not required if Basic conditions Additional conditions  individual has no chargeable gains  he is not chargeable to tax at higher rate  all his income is dividend income  income tax has already been deducted at source from income received  income is taken into account under PAYE Consequences of not giving notice regarding chargeability: a penalty of up to 100% of the tax assessed, which is not paid on or before 31 January following the tax year, is payable. Filing a tax return: HMRC encourages tax payers to file tax returns online and has set two separate filing dates for electronic and non-electronic tax returns Continued…

Electronic: 31 January following the tax year. For the due date to file an online tax return will be 31 January 2012 Non-electronic: 31 October following the tax year. For the due date to file tax return will be 31 October 2011 Due date to file tax return

Features of the self-assessment system as it applies to companies Chargeability of tax for the first time companies must inform HMRC of their tax chargeability within three months of the start of their first accounting period Subsequent chargeability to tax  a notice is sent by HMRC for filing a corporation tax return for a specified period.  however, a company which has not received any notice must notify HMRC about its chargeability within 12 months from the end of period Self-assessment for companies Refer to Quick Quiz on page 527

The time limits that apply to the filing of returns and the making of claims & due dates for the payment of tax under the self-assessment system Individuals Due date for filing return is the later of the following dates:  Within 3 months of tax return being sent by HMRC  31 January following the end of the tax year covered by return for filing tax returns online and  31 October for filing paper based tax returns Payment of tax: self assessment tax is payable in 3 parts PaymentOwing date 1 st payment on account 31 January in the tax year 2 nd payment on account 31 July following the tax year Final balancing payment 31 January following the tax year

RECAP  Explain and apply the features of the self-assessment system as it applies to individuals. [2]  Explain and apply the features of the self-assessment system as it applies to companies. [2]  Recognise the time limits that apply to the filing of returns and the making of claims. [2]  Recognise the due dates for the payment of tax under the self-assessment system. [2]  Compute payments on account and balancing payments / repayments for individuals. [2]  Explain how large companies are required to account for corporation tax on a quarterly basis. [2]  List the information and records that taxpayers need to retain for tax purposes. [1]  Explain the circumstances in which HM Revenue and Customs can enquire into a self- assessment tax return. [2]  Explain the procedures for dealing with appeals and disputes. [1]  Calculate interest on overdue tax. [2]  State the penalties that can be charged. [2]