Tax Report

Tax Report

Introduction

Taxation has been in place since the time of Kings. Tax is being collected since such an old time. Everyone is aware of the taxation system, as every country collects tax from its citizens. In the medieval times, kings used to decide the amount of tax to be charged to its citizens. The taxation laws in the United Kingdom were brought in to force in the seventieth century. The aim of the taxation is to generate a source of income for the government. Taxation was the only source of income for the United Kingdom in the seventieth century, eighteenth century and the early time of nineteenth century. The income taxation was brought in the United Kingdom by William Pitt the Younger. However, Pitt's income tax system was in practice from 1799 to 1802, after that it was replaced by the income tax system of Henry Addington (Adam & Browne, 2006).

Since the origination of income tax system in the United Kingdom, the tax system has changed a lot. In the early days of income tax system establishment, every individual was charged income tax, whether he earned or not. This was a right of the government and citizens of the government had to obey it. It has already been mentioned that the taxation system has changed since its inception. Now the taxation system almost all over the world only taxes individual whose income fall in a certain slab. The corporation tax in the United Kingdom was introduced in 1965. The corporation tax mentions and tells how the companies should be taxed and at which rate the company profits need to be taxed. There are in total around five heads worldwide under which income tax is charged (FTC Kaplan, 2007).

In the current system, people and corporations are taxed on the income earned during the year. The government usually revises its taxation rules and laws accordingly each year. These new rules and tax rates then become applicable. Profits, income, capital gains and other sources of income, all are taxable. The tax rates, tax rules and new laws related to taxation are all introduced, altered and governed by the government through fiscal policy. Every year government releases its forecast for the coming period, issues a monetary policy and a fiscal policy. In order to manage and shape the economy, the government uses fiscal policy (Easterly, 2002).

There are new changes introduced in the taxation system by the government every year. There is a tax division or revenue division in every country's government, which works towards the transparency, and further establishment of the taxation system. Every individual in the country must follow the taxation rules, and must pay taxes. Failure to pay or running away from taxes would be termed as a felony. All individuals who invades taxes may be punished by the government. Similar is the case with corporations, companies who run away from taxes would be susceptible to government punishments. They could also face closure of business or could be faced with heavy ...