Assignment Brief

BA (Hons.) International Business & Finance

Academic Year 2018-19
Module Information:
Qualification: BA (Hons.) International Business & Finance

Module Code & Title: BAIBF 09011Business Taxation

Assignment Title: Individual Report

Component Weighting: 50%

Date of Issue: 01 Oct 2018 Due date: 8 October 2018, 5 PM

To be filled by the student:

Student ID: 4008BA17

Date of Submission: 8 Oct 2018

*All work must be submitted on or before the due date. If an extension of time to submit work is required, a Mitigating Circumstance
Form must be submitted.

Has an extension been approved? Yes No

If yes, please provide the new submission date ….…/.…./……., and affix appropriate evidence.

First Marker: Second Marker:

Agreed Mark: Refer: Yes / No

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Raihan Abdul Shaheed 4008BA17 BAIBF 09011 Business Taxation
General Guidelines
1. A Cover page or title page – You should always attach a title page to your assignment. Use previous page as
your cover sheet and be sure to fill the details correctly.
2. This entire brief should be attached in first before you start answering.
3. All the assignments should be prepared using word processing software.
4. All the assignments should print in A4 sized paper, and make sure to only use one side printing.
5. Allow 1” margin on each side of the paper. But on the left side you will need to leave room for binding.
6. Ensure that your assignment is stapled or secured together in a binder of some sort and send the Softcopy of
your final document to assignment.bahons2017@gmail.com.
7. The submission of your work assessment should be organized and clearly structured.

Word Processing Rules

1. Use a font type that will make easy for your examiner to read. The font size should be 12 point and should be
in the style of Times New Roman.
2. Use 1.5-line word-processing. Left justify all paragraphs.
3. Ensure that all headings are consistent in terms of size and font style.
4. Use footer function on the word processor to insert Your Student ID, Name, Subject, Module code, and Page
Number on each page. This is useful if individual sheets become detached for any reason.
5. Use word processing application spell check and grammar check function to help edit your assignment.
6. Ensure that your printer’s output is of a good quality and that you have enough ink to print your entire
assignment.

Important Points:
1. Check carefully the hand in date and the instructions given with the assignment. Late submissions will not be
accepted.
2. Ensure that you give yourself enough time to complete the assignment by the due date.
3. Don’t leave things such as printing to the last minute – excuses of this nature will not be accepted for failure
to hand in the work on time.
4. A printed version of the assignment needs to be submitted physically along with a soft copy mailed to the
email mentioned above on or before the stated deadline.
5. You must take responsibility for managing your own time effectively.
6. If you are unable to hand in your assignment on time and have valid reasons such as illness, you may apply
(in writing) for an extension.
7. Non-submission of work without valid reasons will lead to an automatic REFERRAL. You will then be asked
to complete an alternative assignment.
8. Take great care that if you use other people’s work or ideas in your assignment, you properly reference them
in your text and any bibliography; otherwise you may be guilty of plagiarism.

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Raihan Abdul Shaheed 4008BA17 BAIBF 09011 Business Taxation
 Statement of Originality and Student Declaration

I hereby, declare that I know what plagiarism entails, namely to use another’s work and to present it as my
own without attributing the sources in the correct way. I further understand what it means to copy another’s
work.
1. I know that plagiarism is a punishable offence because it constitutes theft.
2. I understand the plagiarism and copying policy of the University of the West of Scotland.
3. I know what the consequences will be if I plagiaries or copy another’s work in any of the
assignments for this program.
4. I declare therefore that all work presented by me for every aspect of my program, will be my own,
and where I have made use of another’s work, I will attribute the source in the correct way.
5. I acknowledge that the attachment of this document signed or not, constitutes my agreement on it.
6. I understand that my assignment will not be considered as submitted if this document is not
attached to the attached.

Student’s Signature: …………………………… Date: 08 Oct 2018

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Raihan Abdul Shaheed 4008BA17 BAIBF 09011 Business Taxation
TASK 1

Explain self-assessment of individuals and companies

Word Limit – 1500 words

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Raihan Abdul Shaheed 4008BA17 BAIBF 09011 Business Taxation
 CONTENTS
1.Introduction
2.Self-assessment of Individuals
3.Self-assessment of Companies
4.Conclusion

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Raihan Abdul Shaheed 4008BA17 BAIBF 09011 Business Taxation
INTRODUCTION
Self-Assessment is a system Her Majesty’s Revenue and Customs (HMRC) uses to collect
Income Tax. Tax is usually deducted automatically from wages, pensions and savings. People
and businesses with other income must report it in a tax return. Employees have their income tax
and national insurance liabilities on their employment income, and in some cases on small
amounts of other income, collected at source through the PAYE system.

Self-assessment is the system for the collection of tax which is not deducted through the PAYE
system.

Therefore, employees with more complicated tax affairs and other taxpayers (e.g. the self-
employed) will normally be required to submit details of their taxable income and gains annually
in a tax return, so that their tax liability can be calculated and collected through the self-
assessment system.

The self-assessment is done both by individuals as well as companies.

SELF-ASSESSEMENT OF INDIVIDUALS
Under the self-assessment system for individuals, the onus is placed on the taxpayer to provide
the information to calculate their own tax liability:

• The taxpayer will be sent a notice to complete a self-assessment tax return annually. A return
must be completed and filed either on paper or online.

• Different deadlines exist for filing paper and online returns.

• The tax return covers income tax, class 2 and class 4 NIC and CGT liabilities for the tax year.

• Payment of the tax must be made by 31 January following the end of the tax year to which it
relates.

• Interim payments on account in respect of income tax and class 4 NIC may be required on 31
January in the tax year and 31 July following the tax year for certain taxpayers.

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Return – filing deadline
The deadline for submitting the tax year 2017/18 self-assessment tax return depends on how the
return is filed. The deadline for submitting the return is the later of:

• 31 October 2018 for a paper return

• 31 January 2019 for an electronic (online) return

• three months after the issue of the notice to file a return.

The 31 January following the end of the tax year is known as the 'filing date', regardless of
whether the return is filed on paper or electronically.

Self-employed people: Should complete the self-employment supplementary pages.

Employees: Usually pay their tax liability under PAYE and often a self-assessment tax return
will not be required as there is no further tax liability. However, if they receive taxable income
that is not fully taxed through the PAYE system, they will need to complete a tax return.

Return – calculation of tax

• Where a return is filed electronically: a calculation of the tax liability is automatically provided
as part of the online filing process.

• Where a paper return is submitted: HMRC will calculate the tax liability on behalf of the
taxpayer, provided the return is submitted by the 31 October deadline.

• Where HMRC calculates the tax, it makes no judgement of the accuracy of the figures included
in the return, but merely calculates the tax liability based on the information submitted.

• HMRC normally communicate with the taxpayer by issuing a statement of account, which is a
reminder of amounts owing to HMRC.

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Notification of chargeability
Self-assessment places the onus on the taxpayer, therefore:

• Taxpayers who do not receive a notice to file a return are required to notify HMRC if they have
income or chargeable gains on which tax is due.

• The time limit for notifying HMRC of chargeability is six months from the end of the tax year
in which the liability arises.

• Notification is not necessary if there is no actual tax liability. For example, if the income or
capital gain is covered by allowances or exemptions.

• A standard penalty may arise for failure to notify chargeability.

Determination of tax due if no return is filed

Where a self-assessment tax return is not filed by the filing date, HMRC may determine the
amount of tax due. The impact of this is:

•A determination can be made at any time within three years of the filing date.

• The determination is treated as a self-assessment by the taxpayer.

• The determination can only be replaced by the actual self-assessment when it is submitted by
the taxpayer (i.e. the submission of a tax return).

• There is no appeal against a determination, which therefore encourages the taxpayer to displace
it with the actual self-assessment.

Penalty for not keeping records

A penalty may be charged for failure to keep or retain adequate records.

The maximum penalty is only likely to be imposed in the most serious cases such as where a
taxpayer deliberately destroys his records in order to obstruct an HMRC compliance check.

HMRC has standardized penalties across taxes for different offences.

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The penalty is calculated as a percentage of ‘potential lost revenue’ which is generally the tax
unpaid as a result of the error or failure to notify.

An incorrect return means:

• submission of incorrect returns

• failure to notify liability to tax

Taxpayer behavior Maximum penalty (% of revenue lost)

Genuine mistake No Penalty

Careless/Failure to take reasonable care 30%

Deliberate but no concealment 70%

Deliberate with concealment 100%

Compliance Checks
• HMRC have the right to enquire into the completeness and accuracy of any self-assessment tax
return under their compliance check powers.

• HMRC must give written notice before commencing a compliance check.

• The information requested by HMRC should be limited to that connected with the return.

• An appeal can be made against the request.

• The compliance check ends when HMRC gives written notice that it has been completed.

• The taxpayer has 30 days to appeal against any amendments by HMRC. The appeal must be in
writing.

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SELF-ASSESSMENT OF COMPANIES
As for individuals, self-assessment applies for corporate taxpayers. Responsibility rests with the
company to:

Give the timing of the due date for payment of tax, in practice, many companies will aim to
complete the self-assessment tax return prior to the nine-month deadline for paying the
corporation tax.

Large companies have a different payment date.

The self-assessment tax must be returned by the later of:

•12 months after the end of the period of account, or

• three months after the issue of notice to file a return.

The return must:

• contain all information required to calculate the company’s taxable total profits.

• include a self-assessment of the amount of corporation tax payable for that accounting period.

• be submitted online.

Notification of chargeability
A company coming within the scope of corporation tax for the first time must notify HMRC
when its first accounting period begins, within three months of the start of its first accounting
period.

The time limit for notifying HMRC of chargeability is 12 months from the end of the accounting
period in which the liability arises.

A standard penalty may be imposed for failure to notify HMRC of chargeability.

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Penalties for failure to submit a return
In addition to interest on the late payment of tax, HMRC can impose penalties.

HMRC has standardized penalties across taxes for the submission of incorrect returns and failure
to notify liability to tax.

The penalty is calculated as a percentage of ‘potential lost revenue’ which is generally the tax
unpaid. The percentage charged can be reduced where the taxpayer makes a disclosure and co-
operates with HMRC to establish the amount of tax unpaid.

HMRC can impose fixed penalties and tax geared penalties for the failure to submit a return,
depending on the length of the delay in submitting the return.

Compliance Check
HMRC have the right to enquire into the completeness and accuracy of any self-assessment tax
return and issue discovery assessments under their compliance check powers. The procedures
and rules are similar to those for individuals.

The compliance check may be made as a result of any of the following:

• suspicion that income is undeclared

• suspicion that deductions are being incorrectly claimed

• other information in HMRC’s possession

• being part of a random review process.

Discovery assessments
HMRC has the capacity to raise additional assessments, referred to as discovery assessments.
The key points are:

• The use of a discovery assessment is restricted where a self-assessment return has already been
made.

• Unless the loss of corporation tax was brought about carelessly or deliberately by the company,
a discovery assessment cannot be raised, even if this is found to be incorrect.

• HMRC will only accept that full disclosure has been made if any contentious items have been
clearly brought to their attention – perhaps in a covering letter.

• Only a company that makes full disclosure in the self-assessment tax return, therefore, has
absolute finality 12 months after the actual submission date.

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CONCLUSION
So, we have seen how self-assessment works for both individuals as well as companies. The
basic elements of both are the same with variances in tax rate and penalty charges. Self-
Assessment is key method used by the HMRC to collect tax. HMRC have the right to enquire
into the completeness and accuracy of any self-assessment tax return and issue discovery
assessments under their compliance check powers.
Legally, a tax payer is obliged to submit a tax return when HMRC requests one by sending a
notice to file a tax return, either because the tax payer has registered for self-assessment
voluntarily or because HMRC believes one is required.
Under UK tax legislation, tax payers are obliged to notify HMRC when they have a liability to
tax no later than 9 months after the end of the tax year in which they became liable. Depending
on the circumstances and the tax owed, they may do this by registering for self-assessment and
completing a tax return.
Whilst there is no legal obligation to register for self-assessment for income tax purposes when
there is no liability for tax, HMRC guidance states that a tax return is required.
A company must file a return, using form CT600, and assess its liability to tax, normally within
12 months of the end of its accounting year.

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