Her Majestys Revenue and Customs (HMRC) is a non-governmental department in the UK government which is mandated for the administration of taxes in the country. The process of management of taxes integrates the collection of taxes, payment of some forms of state support and minimum wage administration. HMRC was formed as a result of the merger between the Inland Revenue and Her Majestys Custom and Excise. The merger occurred in 2005, with these two bodies handing over their full responsibilities and functions to the HMRC. It is important to note that the merger of the two tax administrating bodies occurred as a result of the announcement by the Chancellor of the Exchequer Gordon Brown in the Budget on 2004. These agencies had strong different historical bases, inherent powers as well as the legal powers.
Structurally, the HMRC is made up of the officers led by the commissioners for Revenue and Customs. The Queen appoints these officers by the regulations arrived at by the treasury. As a government department, it is headed by the Exchequer Chancellor, who possesses an overall responsibility for the public finance of the United Kingdom. The primary duties of the Commissioners for Revenue and Customs include:
i. Oversee the implementation of the law regarding the direct and indirect tax
ii. To provide the advisory information to the Chancellor of the Exchequer on the matters related to taxation.
iii. To govern the many divisions and the headquarters into which the body is structured.
Notably, the regular role of the HMRC is conducted by the Officers of Revenue and Customs who are known. As part of their taxations roles, these officers have the mandate of carrying out the taxation and the assessment of the taxpayers liability and then ensure that the taxpayers pay the correct amount of the tax as stipulated by the body. The Self-Assessment system allows both the individuals and corporate taxpayers to calculate their tax liabilities, and will ultimately be checked by the HMRC for accuracy. At one time, the tax assessment held the responsibility of the carrying tax inspections while the tax collectors handled the collection. With the recent and current administration, however, both functions have been combined, and therefore, the responsibility of collecting and inspecting the Tax is left under the mandate of the Officer of Revenue.
The HMRC has different specialists who deal with matters such as pension schemes, charities, and trusts among other officers. However, the everyday work related to taxation occurs at the pension schemes, trusts, and many others. Ideally, these local offices have routine mandates of conducting the assessment and collection to ensure that taxpayers comply with the regulations. The networks of the HMRC inquiries center all form an essential component of the tax administrating body because of its role in providing the first point of contract for the taxpayers with the general inquiries.
1.2. Tax enforcement Procedures
The direct taxes are obtained from various sources such as the on income and other business revenue. The significant direct taxes include the income tax, capital gains, inheritance tax and the corporate tax. The contributions from the national insurance organizations also form an essential component of this groups of taxes. On the other hand, the indirect taxes are those that are obtained from spending and include the Value Added Taxes and others types of duties such as the stamp, custom, and excise.
Like any tax administering body, the HMRC has its unique procedures through which the process of taxation is enforced. Fundamentally, the companies are assessed by the reference of their accounting periods, which is the period for which the company makes its accounts. This period cannot, however, go beyond 12 months, and therefore the majority of the businesses both the domestic and foreign organizations requires preparation of more than one type of corporate tax return.
The taxpayers have to remit their taxes to the authority. This often involves filling the statutory accounts and the tax returns that must include the self-assessment of the tax payable and this largely eliminates any possible assessment by the HMRC. However, the HMRC has the assessing powers in some cases, especially where the body is not contented with the return. The HMRC stipulates explicitly that the returns must be completed online and in the format specified by the body, and which can be easily read on the machine used by the Tax authorities.
For the corporates, the corporation tax is payable in nine months and one day after the completion of the accounting period. However, significant organizations use a quarterly payment account systems, and the first payment is always made in the seventh month of its accounting period. In the HMRC system s, companies are considered significant when they have the taxable profit of more than GBP 1.5 million at the end of any given accounting period. The limit is however reduced regarding the number of common under control where appropriate.
The United Kingdom tax system can impose numerous penalties for failing to adhere to self-assessment system. The sanctions may be imposed in various circumstances such as late filing of returns, failing to maintain appropriate records, incorrect financial records, the presence of errors in the documents submitted to the HMRC. On the Contrary, the unreasonable failure to report errors in the assessment by the HMRC and the inability to give the response to the notice of inquiry from the taxpayers may also contribute to the sanctions.
TAX ADMINISTRATION IN MALDIVES
Maldives is a South Asian island country, which is situated in the Indian Ocean, located in the Arabian Sea. It lies to the southwest of India and Sri Lanka. It is one of the founding members of South Asia association and a member of the United Nations. Conceivably, it is categorized by the World Bank as a developing economy with fishing being the dominant economic activity of the vast majority, in the recent past, its tax income has been faced with inceptions of new policies that seek to better the revenue authority of the country.
Tax administration refers to the management and the implementation of the processes that allow a given nation or state receive its taxes bylaws stipulated in the statutes governing taxations. Typically, it is the mandate of the government taxs service to provide an effective and efficient means of collecting the tax while also providing the necessary administration service to the nations citizens to ensure that their hard-earned tax is managed promptly. Tax administration typically includes enforcement, assessment, collection, litigation, publication, and statistical gathering functions under states laws, statutes, and existing conventions. Just as tax collection s a mandate to a working government, Maldives, which is a small country, have also gone further steps to align its revenue collecting body to sufficient function in procedures of collection and administration of citizens tax. Maldives as a country is vulnerable to economic shock with its taxation pillars coming from tourism, which accounts for 30% of the gross domestic product, and more than 60% of the foreign exchange being from internal activities. The Maldives Inland Revenue Authority (MIRA) is a wholly autonomous body, which is responsible for tax collection in the Maldives. The institution collects approximately 79 percent of the entire revenue that Maldives government receives in the year 2016.
MIRA is vested with myriads of responsibilities, which include execution of the tax laws, implementing the tax policies, as well as providing technical advice to the government to help in determining the tax policies. This body was established in the wake of 2010 to be separate and independent in a legal entity. Following its establishment, it became one of the modern tax systems was introduced to the Maldives through the tourism goods and services tax act which also came into existence in January 2011 and service tax act of October 2011. The tourism goods and service tax act (TGST) was brought into effect in January 2011. Under this bill, the TGST was agreed to be charged on the value of goods and services that were supplied by the tourist's resorts, hotels, picnic islands, guesthouses and on specific services that were provided by individual places providing vital services to tourists in Maldives. The implementation of this policy resulted in a higher projection of tax rate by 3.5 percent. However, the system was abolished following the initiation of the goods and services tax act.
The goods and services tax act replaced the TGST. It came into practice in late 2011; it is at this time that was an expansion of tax collection to all sectors of the economy. It imposed a GST to a rate of 3.5 %from October 2011to December 2011and subsequently 6% from January 2012 to December 2012. The GST rate on the tourism Goods and Services rose to 8 percent on 1 January 2013 to 12 percent on 1 November 2014. This translated the GST rate on general good s and services to remain at 6% from January 2012. Since the setting up of MIRA, the government mandated the body to carry out tax collecting duties to implement tax-related laws as well as tax policies. The objectives of the MIRA included:
Enforcing the taxation acts as well as performing taxation policies to ensure that the country maximizes on the revenues that are collected
Carrying out all work concerning receiving all tax that is imposed by the state under the laws of the land:
Ascertaining whether the total tax payable has been calculated in accordance to the rules and regulations and that the tax, fees and other monies owed are paid in full and as when they are due
To develop and reinstate the regards for the right of taxpayers while exercising the authority conferred to the MIRA
Relaying and giving complete information to the taxpayers on the taxation acts as well as any regulation that may occasionally be formulated, and establishing the efforts aimed at minimizing the costs involved for taxpayers in the process of making tax payments
Planning a system where the costs of administering of tax is reduced
Prescribing the content and preparing the tax returns, statements, claims, notices and other forms that are required under the taxation acts and to make any amendment if there is need
Structurally, MIRAs executive board members are appointed directly by the president with the approval of the peoples Majlis. The constituted board, therefore, is responsible for determining the administrative policies of the body. The committee is formed of seven members with an inclusion of the Commissioner-General of Taxation and a deputy who deputize the General Commissioner. The board enjoys a term of five years in the office.
The self-assessment system offers the taxpayers the exclusive rights to make appeal in regard to the decisions made by the HMRC. For instance, a taxpayer may make appeals against the discoveries assessment or any possible amendments made by the HMRC in relation to the taxpayers self-assessment. An appeal is fundamentally an internal review of the decisions made by the officials belonging to the HMRC or any hearing made by the tribunal. However, the primary features of any appeal systems include:
The appeal must be sent to the HMRC in writing within 30 days of the disputed decisions
The taxpayer has the powers to make an application for the postponement of the payments of all or any part of any tax which is payable as a result of the decisions. However, the interest of the taxation body will still continue to accrue on the postponed amount until the tribunal settles on the appeal. However, it is...
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