Taxation Systems and Implications in National and International Context

TAXATION

TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................2
INTRODUTION..............................................................................................................................1
TASK 1............................................................................................................................................1
Analysing tax systems and implications in national and the international context.........................1
Taxation System of UK.............................................................................................................1
Impact of the taxation legislations............................................................................................4
Taxation liabilities for the individuals.....................................................................................4
UK self employment tax and the corporation tax...................................................................5
Comparison of the income tax of UK with Spain, France, USA and Canada......................6
TASK 2............................................................................................................................................9
Taxation Liabilities for Unincorporated organisations....................................................................9
Unincorporated Organisations.................................................................................................9
Taxation Legislations for the Unincorporated Organisations.............................................10
TASK 3..........................................................................................................................................11
Key ethical and the legal constraints in the tax legislations..........................................................11
Tax evasion and avoidance.....................................................................................................11
Self Assessment and the Late payment charges....................................................................12
HMRC charges penalty for the failure to make payments timely......................................13
Late payment charge and penalty for companies for the late filing tax.............................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUTION
Taxation could be defined as means through which government or taxing authority levies
or imposes taxes on the citizens and the business entities of country. Taxes are levied in every of
the country of world mainly for purpose of raising revenues. It is also described as charged at a
fixed percentage over income of individual and businesses, on transactions and profits that
support government in the expenses and its revenues. In the modern economics taxation is an
important source for the government to earn revenues. Taxation differs from sources of the
revenues in which they are levied compulsorily and also unrequited which means not paid for
exchange of specific things like particular public services, sale of the public services, sale of the
public property or issue of public debt. Taxes are collected primarily for welfare of the taxpayers
as whole. Tax liability is independent of specific benefits received. Revenues raised are used for
meeting budgetary demands (Liu, 2018). It includes financing the public and government
projects and making business environment in country conducive for the economic growth. The
government projects are taken for increasing the standard of living, creation of jobs and to
increase the consumption levels. A effective taxation system helps in overall growth of country
with equal distribution of income and providing standardised public services.
Charles and Charles Strategy consultants is tax consultant and advisory firm offering
services to small and medium sized businesses. The report will reveal the national and
international taxation systems, individual and business taxation liabilities for the private and
public organisations and the unincorporated organisations. It will also discuss the legal and
ethical issues related to the taxation responsibilities at the national and international levels.
TASK 1
Analysing tax systems and implications in national and the international
context
Taxation System of UK
UK has tax system that is ruled by the taxation legislations acting over three levels of
government. It includes central, regional and local level.
The tax structure of UK is classified in two categories; Direct and Indirect tax.
Direct tax is defined as tax which is imposed directly over taxpayers and is paid to
government. An individual is not allowed to assign or pass another person for the taxes on behalf
1

of individual. Direct taxes imposed mainly are Income tax which is applicable over income
earned by taxpayer or individuals. Corporate tax is applicable over profits which are earned by
the companies from business.
Indirect tax is referred as tax levied over profits, income or revenues but goods and the
services rendered by taxpayers. Indirect taxes could be shifted from one person to other. The
indirect taxes include VAT, landfill taxes, custom duties and the excise duties.
The legislations also provisions that exempt some individuals from payment of taxes when
the income is below threshold limits prescribed (Budak and James, 2018). Individuals are
exempt from tax of household income is below £11850 and corporation tax of 19% on the
earnings up to £300000.
Central Government Level
Main source of revenues for central government is Income tax, Value added tax, National
Insurance Contribution and Corporate tax.
Income tax
The individuals are required to pay income tax every year on all the earnings made
throughout the year from national and international sources. However the non residents are
charged only for their UK based income. Individual tax rate applicable is determined on the basis
of below mentioned income levels.
Tax Band Income levels Applicable tax rate
Personal Allowances 0 - £12,500 Nil
Basic tax rate £12,501 - £50,000 20%
Higher tax rate £50,001 - £150,000 40%
Additional tax rate Above £150,001 45%
National Insurance Contribution
It is the fundamental component of welfare state of UK. It is considered as social security as
payment of the contribution establishes entitlement to the certain benefits from state to the
workers and families like Maternity allowance and State Pension. In UK individuals start paying
NIC from age of sixteen when income earned reaches certain level. Self employed individual has
to make contributions on profits above £6475 in a year. An employee has to pay NIC class 1 on
2