The UK taxation system relevant to the typical tax paying resident within the UK consists of Income tax, Corporation tax and Capital Gains tax. In the past tax payers have tried to ‘evade’ paying tax, with some ludicrous plans to keep their own personal taxes to a minimum, if not have a tax liability in the negative. This is partly why the UK Government has had to implement tax laws to maintain and clarify the structure of the taxation system within its policies. The system relies on a number of references, these are known as ‘sources of tax law’. These keep control of the taxation system and give a framework which users can adhere to. There are three different types of sources for tax law. Initially primary sources, such as Statute law, Case law and European Court of Justice decisions. Secondary sources; extra-statutory concessions, informal concessions, statements of practice and statutory instruments. These secondary sources are all produced by the HMRC (Her Majesty’s Revenue and Customs). Finally further sources,mainly European Union treaties, regulations and directives.
Within this essay I will evaluate the relevance of each source, consider whether they are subjected to parliamentary scrutiny, if so whether there has been significant deliberation over them. I will also consider whether the sources have the force of law.
The role of statutes within taxation is fundamental in how they affect the taxation system. The most countries including the UK, statutes/laws on tax are definite, and must be followed. They give structure to the taxation practices within their accounting records, to minimise tax evasion. If the laws are broken, the law breaker could be fined or even go to jail. A famous example of a tax evader is Wesley Snipes the actor who got sent to jail for trying to get out of paying $41 million in taxes. (US Attorney Robert O'Neill of Florida) wrote in court documents: “This case cries out for the statutory maximum term of imprisonment, as well as a substantial fine, because of the seriousness of defendant Snipes' crimes and because of the singular opportunity this case presents to deter tax crime nationwide," A statute law that is published annually is the Finance Act. Whereby the Chancellor of the Exchequer is inclined to produce a Budget annually on ‘budget day’ (typically within March due to income and corporation taxes being annual typically) with details of differences in spending, tax and duty. The differences incurred within tax, are seen as a new law to be adhered to each year these new or updated laws produce the Finance Act of that year currently Finance Act (2009). A weakness with the Finance Act is that having annual acts, changes to laws. This demonstrates the lack of demographic scrutiny involved. To have the whole budget produced by a certain date, according to when the tax year ends may seem unnecessarily political, to rush out laws on tax to make a date to deliberate for longer and to break down the budget into two sections. These two sections should then to be distributed throughout the year may bring less of a workload through one part of the year, allowing for better attention to detail on each law being set. This would lessen the need for Extra-Statutory Concessions, and amendments to the Finance Act. By having these amendments, it shows that there was not enough deliberation/scrutiny involved, or the errors would have been foreseen and eradicated.
Case law is the reported decisions of courts (called courts of first impression) which make new interpretations of the law and, therefore, can be viewed as precedents in a process known as ‘stare decisis’. Using the earlier example, if Wesley Snipes was the first person to be prosecuted for tax evasion, then his ruling would have set a precedent for future cases. This is what we see as ‘case law’, the precedent that had been set is used as a basis for future rulings. Relating this to the Wesley...
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