ACCA ATX flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Self assessment filing deadline

For UK online self assessment, the return must be filed by 31 January following the end of the tax year; paper returns are due by 31 October.

Payments on account

UK income tax payments on account are 50% of the prior year's income tax and Class 4 NIC liability, due on 31 January and 31 July, excluding capital gains tax.

Discovery assessment time limits

HMRC can raise a UK discovery assessment within four years after the tax year, extended to six years for careless behaviour and twenty years for deliberate behaviour.

Late filing penalty

A UK self assessment return filed late incurs an initial £100 penalty, then daily £10 penalties after three months, capped at £900, plus further percentage or fixed penalties.

GAAR meaning

The UK general anti-abuse rule targets arrangements whose main purpose is to obtain a tax advantage that is not consistent with the policy of the relevant tax legislation.

Personal allowance taper

In the UK, the personal allowance is reduced by £1 for every £2 of adjusted net income above £100,000, reaching nil at £125,140.

Savings starting rate

The UK savings starting rate is a 0% band of up to £5,000 for savings income, reduced by any taxable non-savings income above the personal allowance.

CGT annual exempt amount

The UK capital gains tax annual exempt amount is deducted from net chargeable gains for the tax year; unused amounts cannot generally be carried forward.

Share identification rules

For UK capital gains tax, shares are matched with disposals in the same day, then acquisitions in the following 30 days, then the share pool.

Business asset disposal relief

UK business asset disposal relief charges a 10% capital gains tax rate on qualifying business disposals, subject to a lifetime limit that must be checked for the relevant year.

Potentially exempt transfer

A UK lifetime gift to an individual or disabled trust is a potentially exempt transfer; it becomes chargeable only if the donor dies within seven years of the gift.

Nil rate band

The UK inheritance tax nil rate band is the threshold taxed at 0% on chargeable transfers, currently £325,000 per person, with unused band transferable to a spouse.

Taper relief IHT

UK inheritance tax taper relief reduces the death tax on a lifetime transfer by 20% for each complete year survived after three years, so no relief applies after seven years.

Business property relief

UK business property relief can give 100% or 50% inheritance tax relief on qualifying business assets, such as unquoted trading company shares, subject to ownership periods.

Marginal relief corporation tax

UK companies with profits between the small profits and main rates limits pay corporation tax at the main rate less marginal relief, which phases in the higher rate.

Annual investment allowance

The UK annual investment allowance gives 100% corporation tax or income tax relief on most plant and machinery, subject to an annual limit that must be checked.

Group relief

UK group relief allows a company to surrender trading losses to another group company, generally where there is a 75% beneficial ownership relationship.

Loans to participators

A UK close company making a loan to a participator may trigger a tax charge on the company, often called section 455 tax, repayable when the loan is repaid.

VAT registration threshold

UK VAT registration is generally required when taxable turnover exceeds £90,000 in a rolling 12-month period or is expected to exceed it in the next 30 days.

Input tax

UK VAT input tax is tax incurred on business purchases and services; it is recoverable if used for taxable business purposes, subject to blocked input tax rules.

Option to tax

A UK option to tax makes supplies of an interest in land taxable at 20% VAT, allowing input tax recovery, but it can affect property buyers and tenants.

Place of supply services

For UK VAT, business-to-business services are generally supplied where the customer belongs, while business-to-consumer services often follow the supplier's place of belonging.

Statutory residence test

The UK statutory residence test uses automatic tests, sufficient ties and days present to determine whether an individual is resident in the UK for a tax year.

Remittance basis

The UK remittance basis can apply to non-domiciled individuals, taxing foreign income and gains only when remitted to the UK, usually for a charge after seven years.

Double taxation relief

UK double taxation relief prevents the same income or gains being taxed twice by giving a credit for foreign tax, normally limited to the UK tax on that income.

Permanent establishment

A UK permanent establishment is a fixed place of business or dependent agent through which a non-resident company trades, creating UK corporation tax exposure on attributable profits.

Non-resident CGT

Non-residents disposing of UK land or property may pay UK capital gains tax, with residential property disposals generally reported and paid within 60 days of completion.

Tax evasion

Tax evasion is the illegal non-payment or underpayment of tax by deliberate concealment, false statements or failure to disclose, and can lead to criminal prosecution.

Tax avoidance

Tax avoidance uses legal arrangements to reduce tax in a way that may conflict with the intention of Parliament; aggressive schemes can be counteracted by the GAAR.

Ethical conflict of interest

An ethical conflict of interest arises when a tax adviser's objectivity is threatened by serving two clients with opposing interests; safeguards include disclosure and separate teams.

Relevant cash flows

For after-tax decision making, relevant cash flows are incremental, future and cash-based, excluding sunk costs and non-cash accounting items while including tax effects.

Incorporation tax planning

Choosing a company structure can change NIC, corporation tax and dividend tax outcomes; extraction strategy must consider salary, dividends, pensions and the associated company rules.