Administration of Tax

• Penalties are based on the Potential Lost Revenue arising as a result from the error
• A penalty will be cancelled if the conditions imposed by HMRC are complied with by the taxpayer within a period of up to two years
• The time limit for keeping corporation tax records is six years from end of accounting period
• The time limit for keeping income and capital gains tax is the 5th anniversary of 31 January following end of tax year if taxpayer is in business, otherwise 1 year if not in business
• The time limit for keeping VAT records is six years
• The general time limit for taxpayers making claims is four years from the end of the tax year or accounting period
• Income tax and NIC due and normally paid electronically is due by the 22nd of the month following the tax month to which they relate
• P11D form is for benefits, and sent to HMRC by 6 July following end of tax year
• P60 form details gross pay, and is supplied to each employee by 31 May following end of tax year
• P45 form is when an employee leaves the firm.
• Individual must notify HMRC by 5 October if they have to have a tax return or not
• Due date for an electronic return submitted online is the later of 31 January following the end of the tax year or three months after the return was issued
• The due date for the submission of a paper return is the later of 31 October following the end of the tax year or three months after the return was issued
• A self assessment can be made up to four years from the end of the tax year to which it relates
• HMRC may send a short tax return if they are employees, sole traders or pensioners with a turnover less than the VAT limit, £85,000
• If there is a dispute in a return, taxpayer must contact HMRC within 60 days of the assessment
• HMRC has a right to amend tax returns within 9 months of the date the return is actually filed
• The taxpayer has the right to amend a tax return for any reason within 12 months of the normal due submission date
• Income tax and Class 4 NICs are paid on 31 January, 31 July and balancing payment paid 31 January following the end of the tax year
• For tax due collected via PAYE, return must be filed on paper by 31 October following tax year end or 30 December if online
• Companies have to notify HMRC within 3 months of the start of the first accounting period
• Notice of taxable profits must be made within 12 months of the end of the accounting period to HMRC
• Penalty points for VAT expire after 2 years and 1 month
• Penalty points can be reset by submitting all VAT returns on time for the period of compliance given in the exam sheet
• Late payment interest on unpaid VAT is charged at 2.5% x Bank Base rate
• VAT errors can be corrected if not deliberate and do not exceed £10,000 or 1% x net VAT turnover for return period (max £50,000)
• Self employed businesses and landlords with business turnover above £50,000 have to follow the Making tax digital for income tax rules
• Notice must be given by HMRC of the intention to enquire into a submitted return by;

  • First anniversary of the actual submission date
  • If return filed after due date, the quarter following the first anniversary of actual submission date
• Determination by HMRC must be made within 3 years of the statutory filing date
• HMRC may collect tax debts of at least £1,000 directly from bank accounts
• HMRC can request for appointment diaries, notes of board meetings, correspondence, contracts etc.
• HMRC can publish information about a tax agent engaged in dishonest conduct if their penalty exceeds £5,000. This includes name and address.
• Each payment on account is half of the income tax and class 4 NICs paid under self assessment for the previous year