Part II: Income Tax

Basic Concepts, Tax Unit, Reliefs and Deductions, and Calculation

1. How is income defined in the UK for tax purposes? What are the problems with this definition?

2. Why is timing relevant in taxation?

3. Is the individual the best choice of tax unit for the income tax?

4. Are National Insurance contributions a ‘tax’?

5. Is the personal allowance too generous?

6. Should taxpayers be allowed to share their unused personal allowance with others, and if so, whom?

Employment Income

1. What should be the aim (or aims) of a system of taxation of employment?

2. Is the case law on income ‘from’ employment satisfactory?

3. Should benefits be taxed?  If so, on what basis?

4. Is Pepper v Hart correctly decided?

5. Are the rules on living accommodation satisfactory?

6. How, if at all, would you reform or rationalise the law on benefits?

7. What is the general test for deductibility of expenses? Is it too narrow?

8. Is Revenue and Customs Commissioners v Banerjee (No 1) (CA) correctly decided?

9. Is the question of whether a worker should be taxed as an employee or under Schedule D Cases I or II (ITTOIA 2005 Part 2) a question of law or fact? Is the test logical and coherent? Does it reflect current social and economic conditions?

10. Should tax law use the same test for employment as other areas of the law, eg labour and tort law? Why or why not?

11. Discuss the tax advantages and disadvantages of self-employment over employment.

12. What are the differences between the rules for the deduction of expenses applicable to the employed and self-employed? Are they explicable by the nature of the relevant income? What, if any, reforms to these rules would you recommend?

13. Why did the government consider it necessary to introduce special rules to deal with the provision of personal services through intermediaries?

14. What reforms would you make to the employee share scheme rules?

Business Income

1. What are the difficulties encountered in taxing business profits?

2. How could these problems be tackled by radical reform?

3. What effect would alignment of taxable and accounting profits have on business taxation and on accounting standards?

4. Does the William Grant/Mars case end the UK debate on whether case law can qualify accounting standards on the definition of profit for tax purposes?

5. How is it decided whether a taxpayer is engaging in a capital transaction or trading and why does it matter? 

6. To what extent, if at all, is motive relevant to the question of whether a taxpayer is trading?

7. In the case of Inland Revenue Commissioners v John Lewis Properties plc (2002), Arden LJ (dissenting) commented that it was difficult to discern any organising principle which is used to draw the line between capital and income receipts for the purposes of business taxation, save in the ‘compensation’ cases and (perhaps) the case of premiums on leases. Is this a fair comment on the current case law? What reforms are required?

8. When is a receipt by a taxpayer who is a trader not a trading receipt?

9. At what time is a business profit ‘made’ for tax purposes? Why does this matter?

10. How does the law on trading income deal with self-supply by a trader? Does this make sense?

11. What expenses may a trader deduct from his taxable income?

12. Why was Mallalieu v Drummond decided as it was?

13. Is apportionment of mixed personal and business expense ever permissible for the purpose of deciding whether an expense is deductible for business tax purposes?

14. Is Samad Samadian v Revenue & Customs Commissioners correctly decided? What does this case add to our understanding of the deductibility of business travel expenses?

15. Is the meaning of ‘plant and machinery’ for capital allowances purposes clear?

16. Is the UK too restrictive on the amount and types of capital allowances taxpayers can claim?

Income from Land, Savings, Miscelaneous and Other Income, and Trusts

1. Should the personal savings allowance be repealed?

2. Is the definition of ‘interest’ for UK income tax purposes satisfactory?

3. What reforms, if any, would you make to the taxation of annuities and other annual payments?

4. Describe how trusts and beneficiaries are taxed on income.

5. In the context of income tax and trusts, should we aim to tax the settlor, the beneficiaries, or the trustees?

6. For income tax purposes, what should be the definition of “settlement”?

7. Should different types of trust receive different income tax treatment?

8. Describe how following a taxpayer’s death the personal representatives and beneficiaries are taxed on income, and also their respective administrative responsibilities.

9. Why were the settlement provisions introduced and how effective are the current rules?

10. Is the meaning of ‘settlement’ in ITTOIA 2005 Part 5 Chapter 5 too broad?