Phuong - Taxation - Chapter 8 - The tax practitioner and the UK tax environment - ver1
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Phuong - Taxation - Chapter 8 - The tax practitioner and the UK tax environment - ver1 Phuong - Taxation - Chapter 8 - The tax practitioner and the UK tax environment - ver1 Presentation Transcript

  • Unit 12: Taxation Chapter 8 The tax practitionerand the UK tax environment Nguyen Hoang My Phuong menfuong@gmail.com Chau Hung College / BTEC - Edexcel http://chauhung.edu.vn
  • Unit 12: Taxation The tax Inheritance practitioner tax The tax practitioner &Income and UK tax the UK tax capital legislation environmentClassification HM Revenue of income & Customs
  • The main sources of UK tax legislation The key reference sources for UK tax legislation The organisation of HM Revenue & Custom & its terms of reference including the appeals systemObjectives The appeals process The classification of income & the aggregation of income which is then subject to income tax The difference between income & capital profits/losses
  • Sources of tax law - 1 There is no single source of UK tax law The basic rules are laid down in Acts of Parliament but it is left to the courts to interpret these Acts & to provide much of the detail of the tax system In addition, HMRC issues a variety of statements, notices & leaflet which explain how the law is implemented in practice. These statements have no legal backing but they explain the tax authorities’ interpretation of the law & will be adhered to unless successfully challenged in the courts
  • Sources of tax law - 2 Statute (i.e. Acts of Parliament). Statutes are amend each year by the annual Finance Act which is based upon the Budget proposals. Statutory Instruments is a document which is laid before Parliament & then automatically becomes law within a stated period unless any objections are raised to it Statute is interpreted & amplified by case law Statements made by the tax authorities produced by HMRC
  • Her Majesty’s Revenue & Customs (HMRC) Responsible for the administration of the UK tax system Issues: a) Statement of practice b) Extra-statutory concessions c) Explanatory leaflets d) Business economic notes e) Tax Bulletin f) Internal Guidance www.hmrc.gov.uk
  • Main taxes Tax Suffered by Source / Statute Capital Allowances Act 2001 (CAA 2001); Income Tax (Earnings and Individuals Pensions) Act 2003 (ITEPA 2003);Income tax Partnerships Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005); Income Tax Act 2007 (ITA 2007) Income and Corporation Tax Act 1988Corporation (ICTA 1988), Corporation Tax Act 2009 CompaniesTax (CTA 2009) and subsequent Finance Acts, CAA 2001 as above Individuals Partnerships Taxation of Chargeable Gains Act 1992Capital gains Companies (which (TCGA 1992) and subsequent Financetax pay tax on capital Acts gains in the form of corporation tax)
  • Tax year Individuals Companiestax year / fiscal year / year of assessment: the corporation tax financial year: from 6 April to the following 5 April from 1 April to the following 31 March the tax year 2009/10 the financial year FY2009 from 6 April 2009 to 5 April 2010 from 1 April 2009 to 31 March 2010 The whole program includes the provisions of Finance Act 2009 (based on the March 2009 Budget)
  • The organisation of HMRC Treasury Responsible for the public finance in UK Managed by Imposes and collects taxationChancellor of the Exchequer HMRC Administrative function of collection of tax Commissioners for HMRC • Implement the law relating to direct & indirect taxation • Provide advice to the Chancellor of the Exchequer on taxation matters • Administer the many divisions & offices into which HMRC is organised Officers of Revenue & Carry out the routine work of HMRC, Customs such as supervising the self-assessment system and agreeing tax liabilities; following up amounts of unpaid taxes, etc.
  • Appeals First Tier Tribunal deals with most casesTax Tribunal complex cases which either involve an important issue of tax or a large financial sum Upper Tribunal appeals against decisions of First Tier Tribunal
  • The classification of income – 1 Classified according to the nature of the income Some income is received in full, with no tax deducted in advance (paid gross)  example: gilt interest (interest paid on government securities) Other income is received after deduction of tax (called “income taxed at source”)  example: dividends on UK shares (10%)
  • The classification of income – 2 Income from employment & pensions Profits of trades, professions & vocationsMain types of Income from property letting income Savings & investment income, including interest & dividends Miscellaneous income
  • Income & capital gains/losses Income tax Capital gains taxcharged on income profit which charged on one-off capital profits might be expected to recur example: weekly wages / profits example: profit from selling a from running a business painting owned for 20 years
  • Inheritance tax - 1 wealth left by an individual on deathInheritance tax gifts made by individuals in the seven years prior to (IHT) their death some other large lifetime transfers of wealth  Note:  IHT does not charge on the income/profit made by an individual but rather the amount of wealth given away by that person  IHT applies for the amount transferred out of their estate, whether on death or in the period beforehand
  • Inheritance tax - 2  Rate of tax: Amount Rate Name of rate Tax free / nil£325,000 0% band • On a cumulative basis over a 7- year period • On death>£325,000 40% Full rate • Sometimes apply to large lifetime 20% transfers of wealth and calculated at the time of the gift
  • Inheritance tax - 3 <= £250 per donee / tax year (*) Annual exemption of £3,000 per year (only forward for one year if unused) (*) Transfers between husband and wife (as long as the recipient is domiciled in UK at the time of transfer)Exemptions Gifts to UK charities Gifts to UK political parties Gifts for national purposes (e.g. to museums, art galleries & National Trust) (*) apply only to lifetime transfer, not to property passing on death
  • Inheritance tax - 4 Valuation assets: the market value at the time of the transfer Administration of IHT  HMRC Inheritance Tax  Submit to HRMC an account showing the value of the estate on death and the amount of any chargeable lifetime transfers in the preceding 7 years  Submit to HMRC by the personal representatives of the deceased (usually the executors)  Done within 12 months following the month of death Paid by the personal representatives Tax on the death estate Suffered by the residuary legatee Tax on lifetime transfers Suffered by the recipient (within 7 yrs before the death)
  • The role of the tax practitioner Taxpayer: responsible for submitting the return and for paying taxes Accountant: acting as the taxpayer’s agent Tax practitioner: dealing with the HMRC on behalf of the client (see more in Chapter 12 – Tax documentation and payment of tax)
  • Unit 12: Taxation The tax Inheritance practitioner tax The tax practitioner &Income and UK tax the UK tax capital legislation environmentClassification HM Revenue of income & Customs
  • The main sources of UK tax legislation The key reference sources for UK tax legislation The organisation of HM Revenue & Custom & its terms of reference including the appeals systemObjectives The appeals process The classification of income & the aggregation of income which is then subject to income tax The difference between income & capital profits/losses
  • Q&Amenfuong@gmail.com