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Finance & Accounting
Pages 10 (2510 words)
Introduction Historically, taxation in Britain was collected from serfs who paid rent to their landlords in return for protection (James, 2011). However, in the 1600s, a unified land law was passed which vested control and power to the Crown. Land and property taxes were collected from each landowner to support the government.
They include Income Tax, Corporation Tax, Duties on goods and services, National Insurance Contribution, Value Added Tax and Fuel Duty. All these taxes have different laws and guiding principles. This paper examines the main rules that govern Income Tax and Corporation Tax. It outlines the main components of these taxes and the obligations of the taxpayer in fulfilling his obligations to HMRC. Question 1 The Scope & Core Rules of Income Tax and Corporation Tax Corporation Tax This tax is levied on the profits of businesses. Corporation tax is calculated on the annual income of a business. It was first introduced in the Finance Act 1965. Corporation tax in the UK is currently regulated by the Income & Corporation Tax (1988) and its subsequent amendments. According to Sections 6 and 11 of the Income & Corporation Tax Act (ICTA), corporation tax must be paid by three main groups of entities (McLaughlin, 2011): 1. UK resident companies. This include companies that are incorporated in the UK. Or a company that has its management based in the UK or has its board and directorship services rendered in the UK. 2. Non-resident companies in the UK carrying out trade through a permanent establishment and 3. Unincorporated bodies which are not partnerships that fall within the scope of the tax like societies and voluntary associations. ...
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