The UK tax system is multi-faceted with many taxes and a reporting regime which places the burden of disclosure on the taxpayer. Typically taxpayers need to pay their taxes on time AND report their taxes properly on time. With electronic processing HMRC has no de minimus threshold for requiring income and gains to be reported and with increased connectivity and statistical sampling HMRC are using additional data (eg land registry records) to target specific areas for non-compliance.
Large companies are required to pay their corporation tax quarterly. Most companies pay tax on their profits in arrears. However one off transactions such as property sales can result in a company falling within the quarterly payments regime and late payments if the property was sold near the end of the accounting year.
Income tax – tax returns are to be submitted for those requiring to submit a tax return by 31 January the following year for the tax year ending 5 April.
Capital gains – these are reported on corporation tax returns and income tax returns as appropriate, although it has been announced that this will soon be collected at the time of disposal. Non-residents are required to report property gains within 30 days.
VAT – this is typically a quarterly tax on transactions but can be administered monthly or annually as well.
Stamp Duty and Stamp Duty Land tax – This needs to be reported within 30 days of a transaction. It applies to transactions in shares, land and buildings and is paid by the buyer.
Inheritance Tax – Although seen as a death tax, it is actually a tax on lifetime transfers of wealth. It is reported usually as part of probate of a deceased’s estate, although can be levied earlier on chargeable lifetime transfers.
Gaming Duty – This is administered typically on a quarterly cycle.
Employment taxes – there are numerous compliance obligations depending on the nature of the income (PAYE, shares incentives, benefits in kind). National Insurance is often politically not considered a tax and so has increased in terms of its cost to workers – employed and self-employed.
Contractor’s Industry Scheme (“CIS”) – This is an anti-avoidance tax and is collected through via PAYE by contractors and applies to all sub-contractors who are not themselves registered for CIS.
Annual Tax on Enveloped Dwellings (“ATED”) – Reporting and paying the tax charge is due in April at the start of the tax year. There are many exemptions but these need to be claimed in a similar time frame. The penalties for non-compliance are particularly steep as this tax is targeting non-domiciled individuals and specific tax structures.
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