ACCA Advanced Taxation (ATX) Practice Exam

What must be true for the split year basis to apply automatically?

1. Conditions must be satisfied

2. A claim must always be made

3. Approval from HMRC is required

4. There are no conditions to satisfy

The correct answer is: Conditions must be satisfied

For the split year basis to apply automatically, specific conditions must be satisfied regarding an individual's residence status and the length of their stay in the UK during the tax year. The split year treatment is designed to allow for a fair apportionment of UK tax liability for individuals who are resident in the UK for only part of the tax year due to a change in their circumstances, such as moving in or out of the UK. The conditions usually involve aspects like being non-resident before and after the split year, spending the appropriate amount of time in the UK during the year, or having a permanent place of abode in the UK during that time. Therefore, fulfilling the necessary criteria is essential for the split year basis to apply without the need for a formal claim or additional approval from HMRC. The other options do not accurately capture the requirement for the split year basis. A claim is not always necessary, nor is approval from HMRC, as the application of the split year treatment is based on meeting the established conditions. Additionally, there are indeed conditions that need to be satisfied, contradicting the suggestion that there are none.