The UK tax system and its administration
The architecture of UK tax
Tax law comes from statute (the Taxes Acts, amended annually by a Finance Act), case law and HMRC guidance. The tax year runs 6 April to 5 April, and ATX questions almost always hinge on a date, so ask 'which tax year?' before calculating.
Self assessment
A return is due by 31 October after the tax year end on paper, or 31 January online. That same 31 January is the deadline for the balancing payment and the first payment on account; the second instalment falls on 31 July. Each payment on account is half the previous year's liability, and none is needed where the liability is below £1,000 or at least 80% was collected at source. Capital gains tax is generally paid through self assessment, but disposals of UK residential property need a separate return within 60 days.
Enquiries and appeals
HMRC opens enquiries within 12 months of the filing date and can raise discovery assessments for omitted income. Assessment time limits are 4 years (careless), 6 years (deliberate but not concealed) and 20 years (deliberate and concealed). An appeal must be made within 30 days, with an internal review available before the First-tier Tribunal. Most claims and elections have a 4-year time limit from the end of the tax year.
Traps
Candidates confuse the 31 October paper deadline with the 31 January online one, and forget the fixed £100 late-filing penalty escalating to daily penalties after three months. Learn the behaviour categories, since they drive both penalties (up to 30% and 100%) and time limits.
Worked example
A trader's 2023/24 liability was £10,000 and 2024/25 is £12,000. Payments on account of £5,000 each fall due on 31 January 2025 and 31 July 2025, with the £2,000 balance on 31 January 2026.