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Assignment Brief
MBA International Business & Finance
Academic Year 2019-20
Module Information:
Qualification: MBA International Business & Finance

Module Code & Title: MBAFIBF110003 Maximizing Business Wealth (Tax)

Assignment Title: Individual Report

Component Weighting: 50%

Date of Issue: 04/12/2019 Due date: 10/12/2019, 5 PM

To be filled by the student:

Student ID: 4670MBA19

Date of Submission: 10/12/2019, 5 PM

*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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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 mba.assignment2018@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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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: ………………

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TASK: Explain the Tax Administration of Individuals and Companies.

SOLUTIONS

Tax Administration of Individuals:

Taxable period

The tax year starts on 6 April and ends on 5 April in the United Kingdom.

Tax returns

The United Kingdom has a tax system for self-assessment (SA). As part of this system, the
majority of UK tax payers settle their tax liability entirely through taxes withheld at source on
earnings and savings and do not need to make any further declarations. However, about a third of
taxpayers need to complete a tax return, which will be issued annually by the HMRC. Married
couples and those in civil partnerships are independently taxed and responsible for their own
affairs, and each bears his or her own return.

Tax returns and any outstanding tax paid must be filed by 31 January following the end of the tax
year. This filing date is forwarded to 31 October after the end of the tax year for individuals who
would like HMRC to calculate their tax due for them (although the tax is still due on 31
January).

Payment of tax

Income tax is normally withheld at source from salaries under the PAYE scheme. The savings
income from most other sources in the United Kingdom is received after the basic tax rate has
been deducted. Under the self-assessment scheme, any tax not collected through withholding is
paid on account and the final balance payment due on 31 January after the end of the tax year.
All CGT shall be due by 31 January of the year following the year in which the gain has arisen.

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Individuals who do not pay at least 80 per cent of their tax liability at
source are required to make tax payments on account for the year, based on the level of income
in the preceding tax year. Payments on account are due in two installments, on 31 January during
the tax year and on 31 July following the tax year. Any outstanding tax due shall be payable by
the filing date of 31 January following the end of the tax year. Employers are required to notify
HMRC of total pay, benefits, and expenses paid or reimbursed, and the employee then makes a
claim for allowable business expenses.

Penalties: Automatic penalties are charged when returns are filed late, and interest is charged
when tax is paid late. There is a penalty regime specifically designed to reduce the United
Kingdom tax lost through offshore transactions and structures. The maximum penalty is up to
200 per cent of the unreported tax.

Tax audit process

The HMRC may inquire into an individual's tax return and any information (including any
claims or election) contained therein. The inspector must give notice of his intention to inquire
into the tax return within 12 months of the date of the return being filed (so long as the return has
not been filed late). If the return has been delivered to HMRC after the date of filing, the request
must be made by the ' quarter day ' following the first anniversary of the date of delivery. '
Quarter days ' shall be 31 January, 30 April, 31 July and 31 October.

Statute of limitations

The normal time limit for the assessment is four years after the end of the tax year. This is
referred to as the' discovery' assessment. The time limit for making an assessment of a person in
a case involving a loss of income tax caused' carelessly' by that person is six years after the end
of the tax year. This is a position unless it concerns an' offshore matter', under which the HMRC
will have at least 12 years to inquire. The time limit for assessing a person in a case involving
loss of income tax intentionally incurred by that person is 20 years after the end of the tax year.

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Topics of focus by the UK tax authorities

The United Kingdom tax authorities have a ' spotlight ' system that highlights the characteristics
of tax planning that they are asking taxpayers to be wary of and warn that they are likely to look
into when implemented. Some of the characteristics are included:

 artificial or contrived arrangements are involved

 it seems very complex given what you want to do
 there are guaranteed returns with apparently no risk
 there are secrecy or confidentiality agreements
 taxation of income is delayed or tax deductions accelerated
 offshore companies or trusts are involved for no sound commercial reason
 a tax haven or banking secrecy country is involved without any sound commercial reason
 tax exempt entities, such as pension funds, are involved inappropriately
 it involves money going in a circle back to where it started, and
 the scheme promoter lends the funding needed.

Anti-avoidance

The United Kingdom has a large number of targeted anti-avoidance rules, such as ' disguised
remuneration, ' ' personal service companies ' and ' enveloped dwellings. ' A general anti-abuse
rule (GAAR) has also been introduced.

GAAR

The Government published legislation on the GAAR in the 2013 Finance Act. The Government
has stressed that the GAAR is only intended to apply to abusive tax evasion measures. Indicators
of abuse do not specifically include arrangements that contain non-arm's length terms (as this
was considered to be impractical for many bona fide transactions that did not focus on tax
evasion). However, the legislation is broadly drawn up and includes a subjective ' double
reasonableness test, ' under which arrangements are considered to be abusive if they ' can not
reasonably be regarded as a reasonable course of action in relation to the relevant tax provisions.

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Disclosure of Tax Avoidance Schemes (DOTAS)

The DOTAS regime is designed to address attempts to avoid tax and to introduce the concept of'
notifiable arrangements.' The term ' arrangements' is broadly defined and includes any scheme,
transaction or series of transactions. Promoters and users of schemes that, in summary, contain
defined' hallmarks' of tax evasion and provide a tax advantage are required to notify the HMRC
of the arrangement.

Accelerated tax payment

There is legislation to extend the accelerated payment of tax to users of arrangements disclosed
under the DOTAS rules and to taxpayers who have been involved in planning for a breach of the
GAAR, so that the tax amount in dispute is held by the HMRC until the dispute is resolved.
Legislation also requires taxpayers who have made use of arrangements that have been forfeited
in the litigation of another party to pay the disputed amount to HMRC on demand.

Personal tax offshore anti-avoidance legislation

The United Kingdom has anti-avoidance rules that are broadly designed to attribute the income
of a 'person' abroad (e.g. a non-UK company or trust) to either an individual who transferred the
funds to the person abroad and has the power to enjoy the income of the overseas person (e.g.
they hold shares) or an individual who received a benefit from the person abroad. These rules are
referred to as the 'Transfer of Assets Abroad'.

The requirement to correct (RTC) and failure to correct (FTC)

The requirement to correct was designed to force taxpayers to review their offshore interests and
correct any UK tax errors by 30 September 2018.

After 30 September 2018, taxpayers (including non-UK resident trustees and non-UK resident
landlords) who have' failed to correct' will be subject to a number of significant penalties.

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Tax Administration Of Companies:

Taxable period

Companies are assessed by reference to the accounting period. Normally, the accounting period
is the period for which the company makes its accounts. However, the accounting period for
corporate tax purposes can not exceed 12 months, so that companies preparing statutory accounts
for more than 12 months are required to prepare more than one corporate tax return.

Tax returns

Companies must file their statutory accounts and tax returns within one year of the end of the
accounting period; the return must include a self-assessment of the tax payable, eliminating the
need for assessment by the HMRC (though the HMRC retains its powers of assessment in certain
cases where it is not satisfied with the return or where the company fails to make a return).

Electronic filing requirements: Returns must be filed online, and such returns must be filed in a
specified format that is machine-readable by the tax authorities. The accompanying accounts
should also be in iXBRL format.

Payment of tax

For smaller companies, corporation tax is payable nine months and one day after the end of the
accounting period to which it relates (i.e. before the return has to be filed). A system of quarterly
payments on account (based on estimated profits) is in place for larger companies and groups,
with the first payment due in the seventh month of the accounting period concerned. For this
purpose, a company will generally be considered large in any accounting period in which it has
taxable profits in excess of GBP 1,5 million (reduced by reference to the number of companies
under common control, where applicable).

For this purpose, a company will generally be considered large in

any accounting period in which it has taxable profits in excess of GBP 1,5 million (reduced by
reference to the number of companies under common control, where applicable).

Penalties: The United Kingdom tax system may impose numerous penalties for failing to comply
with the self-assessment system. These include penalties for late filing of returns, failure to keep

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proper records, failure to submit incorrect returns, error in certain documents sent to the
HMRC, undue failure to report errors in the HMRC assessment, failure to respond to a formal
notice of information requested from the tax authorities within the time limit specified.

Other filing requirements

Large companies (those with a turnover of more than GBP 200 million or a balance sheet asset
of more than GBP 2 billion) are required to notify HMRC of the identity of their senior
accounting officer, who must certify annually that the accounting systems are adequate for
accurate tax reporting purposes. Penalties are to be imposed on the officer and the company for
lack of care or intentional failure to fulfill those obligations.

Certain tax planning and structuring transactions and arrangements must be disclosed to HMRC
either prior to or on the implementation of a transaction under the Disclosure of Tax Evitation
Schemes (DOTAS) scheme or the Disclosure of Tax Evitation Schemes (DASVOIT) scheme.
These schemes cover the majority of taxes and are only reporting systems with taxpayers '
responsibility, advisors or sponsors to report. The HMRC is not required to respond to the
reporting, and this is not an advance clearance or approval process. It is a reporting mechanism
only, and new legislation has been introduced to block the reporting of specific arrangements.

Tax audit process

The UK corporate tax process is one of self-assessment. Following the filing of the tax return,
the HMRC shall have a period of (usually) 12 months in which to submit formal enquiries. These
can range from simple requests for information to detailed technical challenges in relation to the
treatments adopted in the tax return. These enquiries are often settled by exchange of information
and correspondence between the taxpayer company and HMRC. If an agreement can not be
reached, arbitration or litigation :may be necessary.

General anti-abuse rule (GAAR): The GAAR applies to income tax, corporation tax, capital
gains tax, petroleum income tax, diverted income tax, apprenticeship tax, inheritance tax (IHT),
SDLT, and ATED, but not VAT. It is aimed at changing the behavior of taxpayers who enter into
what might be considered abusive tax evasion arrangements. The process involves a quasi-
judicial review of the arrangements, the outcome of which must be used as evidence in any

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related tax litigation. The Government has stressed that the GAAR is only intended to apply to
abusive tax evasion measures, which are measured by reference to various indicators, some of
which are subjective.

Limitation Statute

For companies that are members of medium or large groups, there is generally a period of one
year after the statutory filing date for the tax authorities to initiate an enquiry into any aspect of
the return. For other companies, enquiries may be started up to 12 months after the date of the
actual filing. These periods shall be extended for returns which have been submitted after the
filing date, which have been modified by the taxpayer, or where the issue is subsequently
discovered to have not been sufficiently disclosed within the standard period. Longer periods
apply in the event of a lack of disclosure or intentional misfiling.

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4670MBA19 ANSAL K H MBAFIBF110003 Maximizing Business Wealth (Tax)