The Systems for Self-Assessment and the Making of Returns explains and applies the features of the self-assessment system as it applies to individuals and companies, and mentions the use of iXBRL.
The Systems for Self-Assessment and the Making of Returns
a. Explain and apply the features of the self-assessment system as it applies to individuals.
Self assessment is primarily used when income is not collected at the source. The process, which requires the individual to calculate their tax liability, consists of the following steps:
- “The tax is sent a notice to complete the self-assessment either via on online portal or via paper
- Deadlines are provided for each filing option – Oct 31 for paper filing and Oct 01 for online filing, or 3 months after being given notice if its later
- It covers income tax, class 2 NIC, class 4 NIC and CGT
- Payment of any tax is due by Jan 31 of the following year (Interim payments on account may also be required, and may be made on Jan 31 in the tax year, Jul 31 following the tax year and Jan 31 following the tax year)
- Jan 31 of the following year is known as the filing date (for both paper and online)
- When filing online, individuals submit tax returns electronically and the taxes due are calculated automatically
- When filing by paper, the HMRC will manually calculate the taxes due. If the individual tax payer submits their paper return before the Oct 31, they can ask HRMC to calculate the tax due
- It should be noted that when the HRMC calculates the tax they make no judgement on the accuracy of the information given to them
- HMRC then provides a statement of account to the taxpayer as a reminder of the tax amounts due
b. Explain and apply the features of the self-assessment system as it applies to companies, including the use of iXBRL
Companies are required to submit a corporation tax return online within 12 months of the end of their year end. Tax must be paid within 9 months and one day of the end of the financial year, but they do not have to file their return until 12 months after the end of the financial year. Corporation tax returns may be submitted before the 9 months and one day tax payment deadline.
When submitting corporation tax returns, companies are expected to use Inline eXtensible Business Reporting Language (iXBRL). This allows business data to be shared and processed electronically and tagged so they can be read by a computer. HRMC uses online software which produces iXBRL information.
- BPP’s ACCA Taxation (TX) Study Text
- ACCA’s Taxation (TX) Syllabus and Study Guide
- Open Tuition’s ACCA Taxation (TX) Study Guide
- Acowtancy’s ACCA Taxation (TX) Textbook
- My ACCA Exams Journey
- Preparing for ACCA Taxation (TX)
- ACCA Taxation (TX) Syllabus and Study Guide
- A1: The UK Tax System and its Administration | The Overall Function and Purpose of Taxation in a Modern Economy (ACCA TX)
- A2: The UK Tax System and its Administration | Principal Sources of Revenue Law and Practice (ACCA TX)