Tax Question Bank Part 4
Tax Question Bank Part 4
18 A government is considering abolishing the current VAT rules on all food bought in supermarkets (but not any other shop)
and replacing it with the following form of taxation. Each item bought in the supermarket will be subject to a levy of £0.75.
In other words, a person who purchases 10 items of any value will pay £7.50 in tax.
Requirement
The principle behind the proposed system is the:
A Ability to pay principle
B Value principle
C Unit principle
D Neutrality principle
LO 1b
2 Pauline used to earn £20,000 and paid £3,000 i n income tax per annum. She has recently received a substantial pay rise
and now earns £50,000. Her revised income tax is £10,000.
Requirements
What is the principle o n which this tax system is based?
A Progressive taxation
B Regressive taxation
National insurance contributions are a n example of:
C Direct taxation
D Indirect taxation
LO 1b
3 O n e argument proposed in debates about taxation, is that the cost of collecting tax should b e low in relation to the tax
raised.
Requirements
The principle behind this argument is the:
A Ability to pay principle the tax system should be designed to minimize administrative costs and maximize economic
efficiency. When the cost of collecting tax is low compared to the revenue raised, it indicates that the
B Efficiency principle tax system is operating efficiently.
5 John and Dana operate a VAT-registered partnership, employing a large number of staff.
Requirement
Which of the following options correctly identifies which taxes the partners are jointly and severally liable for?
(1) Income tax on each partner's share of profits from the partnership
(2) Income tax of employees deducted under the Pay As You Earn (PAYE) system
(3) Employerand employee national insurance contributions payable in respect of their staff
(4) Capital gains tax on each partner's share of partnership gains
(5) VAT as a supplier of goods
A Alli of them
B (1), (2) and (3) only
C (2), (3) and (5) only
D (1), (2), (3) and (5) only
LO 1e
7 Which of the following options is correct regarding case law, as determined by tax cases in court?
A Case law is purely for guidance when interpreting statutory law
B Case law applies for the 12 months following the date of the particular court case
C Case law can be superseded by further statutory legislation
D Case law sets a precedent meaning the law can never be changed
LO I f