Definition
HMRC (Her Majesty’s Revenue and Customs): HMRC is a non-ministerial department of the UK Government responsible for the collection of taxes, the payment of some forms of state support, and the administration of other regulatory regimes including the minimum wage. It was formed by the merger of the Inland Revenue and Her Majesty’s Customs and Excise in 2005.
Examples
- Income Tax: HMRC is responsible for collecting income tax from individuals and businesses through various schemes such as PAYE (Pay As You Earn).
- VAT Collection: HMRC oversees the collection of Value Added Tax (VAT) from businesses on the increase in value of goods or services.
- National Insurance Contributions: HMRC manages national insurance contributions which are payments made by employees and employers to qualify for certain benefits and the state pension.
Frequently Asked Questions
1. What are the main functions of HMRC?
- Collecting direct and indirect taxes.
- Administering national insurance and state pension.
- Enforcing compliance with tax laws.
- Providing tax reliefs and benefits.
2. How can I contact HMRC?
- You can contact HMRC through their helpline, online services, or by visiting their offices. Their official website provides detailed contact information.
3. What should I do if I disagree with an HMRC decision?
- You can appeal against HMRC decisions. The appeal process involves reviewing the decision, requesting an internal review, and potentially appealing to a tax tribunal.
4. Can I access my HMRC records online?
- Yes, you can access your records through HMRC’s online services by registering for a Government Gateway account.
5. How do I submit my tax returns to HMRC?
- Tax returns can be submitted online through the HMRC website or by post using the relevant tax return forms.
Related Terms and Definitions
- PAYE (Pay As You Earn): A system where employers deduct income tax and national insurance from employees’ wages and pay it directly to HMRC.
- VAT (Value Added Tax): A consumption tax placed on a product whenever value is added at each stage of the supply chain.
- Self-Assessment: A system used by HMRC to collect income tax. Taxpayers report their income and capital gains, and pay tax due, by filing a tax return.
- National Insurance: Contributions made by workers and employers towards certain state benefits, including the state pension.
Online Resources
Suggested Books for Further Studies
- “Taxation: Policy and Practice” by Andy Lymer and Lynne Oats: This book provides an in-depth look at the UK tax system and its administration.
- “Bloomsbury Professional Tax Handbook”: An authoritative guide that covers a wide range of tax-related topics relevant to UK tax law.
- “Tolley’s Tax Guide”: A comprehensive resource on the UK’s tax system, ideal for both students and professionals.
Accounting Basics: “HMRC” Fundamentals Quiz
### What does HMRC stand for?
- [ ] Her Majesty's Reserve Committee
- [ ] Her Majesty's Regulatory Commission
- [x] Her Majesty's Revenue and Customs
- [ ] Her Majesty's Revenue Council
> **Explanation:** HMRC stands for Her Majesty's Revenue and Customs, the UK government department responsible for tax collection and customs.
### Which year was HMRC formed?
- [x] 2005
- [ ] 1989
- [ ] 1995
- [ ] 2000
> **Explanation:** HMRC was formed in 2005 following the merger of the Inland Revenue and Her Majesty's Customs and Excise.
### What type of tax is collected through the PAYE system?
- [ ] Inheritance Tax
- [ ] Capital Gains Tax
- [x] Income Tax
- [ ] Corporation Tax
> **Explanation:** The PAYE (Pay As You Earn) system deals with the collection of income tax directly from employees' wages.
### What is the primary function of HMRC?
- [x] Collecting taxes and administrating national insurance
- [ ] Providing healthcare
- [ ] Regulating financial institutions
- [ ] Conducting national censuses
> **Explanation:** The primary function of HMRC is to collect taxes and administer national insurance.
### What is necessary to access HMRC's online services?
- [ ] A Bank Account Number
- [ ] A Passport
- [x] A Government Gateway Account
- [ ] A Driving License
> **Explanation:** To access HMRC’s online services, you need to register for a Government Gateway account.
### To what tax authority can disputes against HMRC decisions potentially be escalated?
- [ ] The Supreme Court
- [ ] International Tax Organization
- [ ] European Court of Justice
- [x] A Tax Tribunal
> **Explanation:** Disputes against HMRC decisions can potentially be escalated to a tax tribunal after internal reviews.
### Which tax does VAT represent?
- [x] Value Added Tax
- [ ] Vehicle Allotment Tax
- [ ] Variable Annual Tax
- [ ] Virtual Attendance Tax
> **Explanation:** VAT stands for Value Added Tax, which is applied to the increase in value of goods and services.
### What type of return process is "Self-Assessment"?
- [ ] Employer-based tax filing
- [ ] Payment collection through banks
- [x] Taxpayers report their income and capital gains themselves
- [ ] Automatic payroll deduction
> **Explanation:** The Self-Assessment process is where taxpayers report their income and capital gains and pay taxes due.
### What are national insurance contributions used for?
- [ ] Local government improvements
- [ ] Building schools
- [x] Qualifying for state benefits and pensions
- [ ] Funding political parties
> **Explanation:** National insurance contributions are used towards qualifying individuals for state benefits and the state pension.
### How can individuals submit their tax returns to HMRC?
- [ ] Through social media
- [ ] By calling HMRC
- [ ] By presenting at a local council
- [x] Online or by post
> **Explanation:** Tax returns can be submitted to HMRC online through their website or by post using the relevant forms.
Thank you for exploring the comprehensive details of HMRC and testing your knowledge through our quiz questions. Keep expanding your financial literacy!
