Business Taxation Essay Example | Topics and Well Written Essays - 1250 words - 1

Business Taxation - Essay Example This scheme is said to help in reducing the amount of paperwork as one need not necessarily keep track of all VAT expenditures. For one to register for the VAT Flat Rate Scheme, these conditions are worth noting. First, the estimated annual taxable turnover should be below  £150,000 (SJD Accountancy Ltd, 2015). Secondly, if one already joined the scheme will continue staying in it until its turnover hits  £230,000 per year. Third, the taxpayer will not be able to claim back most of the Vat paid on the purchase of goods and expenses. However, a VAT claim can be made to the HM Revenue and Customs on capital assets costing  £2,000 and above. Fourth, a VAT Flat Rate Scheme registered business will be required to charge the full VAT rate on all goods and services and file a return every quarter (Easy Accountancy, 2015). When Molly registers as a VAT Flat Rate Scheme, she will benefit from this scheme by earning money from the VAT because she will charge her sales the normal standard VAT rate of 20% but pay the lower rate of 8.5%. Therefore, the extra revenue earned from this scheme will be: According to the HM Revenue and Customs (2015), tax evasions are an illegal act and are where an individual deliberately attempts not to pay the tax due. The corporations or individuals engaging in tax evasion misrepresent their incomes to the relevant tax administrating body. Such misrepresentations are in the form of inflating deductions, underreporting incomes and using offshore accounts to hide money and its interest (Cornell University, 2015). In simpler terms as put by Murray (2015) and the Taxpayers Australia (2014), tax evasion is the illegal act of failing to pay taxes by failing to report income, reporting disallowable expenses, or failing to pay the tax owed. On the other hand, tax avoidance is a legitimate way of minimising taxes by using the avenues approved by the tax authority