ACCA Applied Skills · Taxation (UK)

Principal sources of revenue law and practice: formula sheet

Full chapter guide

Key formulas

Statute: Act of Parliament (e.g. Finance Act 2025) = primary legislation; Made by Parliament. The Finance Act examined for exams from 1 June 2026 to 31 March 2027 and June 2027 is the Finance Act 2025.
Statutory instrument: SI = secondary legislation made under power in an Act; Gives detail and has legal force. It cannot go beyond the power the Act gives.
Case law and precedent: Higher court decision → binds lower courts on the same point; Same-level or lower-court decisions are persuasive only. The Supreme Court is at the top of the usual appeal route.
HMRC practice: HMRC manuals and guidance ≠ law; They show HMRC's view. Courts are not bound by them.
Examinable cut-off: Prospective legislation is not normally examined until it takes effect; Applies to provisions in a Finance Act and to those introduced by statutory instrument.
Order of authority: Statute and case law (binding) > HMRC practice (persuasive, not binding); If HMRC practice conflicts with the law, the law prevails.
Statements of practice: Statement of practice = HMRC's general published interpretation of how it applies the law; Not law. Taxpayers can usually expect HMRC to follow it, but a court is not bound.
Extra-statutory concessions: Concession = relaxation of the strict legal position, published by HMRC; Has no statutory force. Many have been replaced by legislation, so do not assume a concession still applies.
Manuals: Manual = HMRC guidance to its own staff, made public; Shows how HMRC will behave. It is not law and does not bind the courts.
Briefs and guidance: Brief or guidance = HMRC's communication to taxpayers about its view of a change or point; Persuasive only. Check it against the legislation.
Tax planning (mitigation): Legal + uses reliefs as intended by Parliament; Acceptable. Examples: ISAs, pension contributions, spouse transfers.
Tax avoidance: Legal in wording + defeats the intention of the law; Not a crime, but HMRC can counteract it. Often artificial, with no commercial purpose.
Tax evasion: Illegal + deliberate dishonesty towards HMRC; Criminal offence. Hiding income or falsifying claims.
GAAR test: Tax advantage + main purpose (or one of the main purposes) + not a reasonable course of action = abusive; If met, HMRC makes just and reasonable adjustments to counteract the advantage.
GAAR safeguard: Independent advisory panel opinion before HMRC counteracts; A procedural safeguard, so HMRC cannot act on the GAAR alone.

Quick revision

Statute is the primary source of UK tax law. It is mostly the Finance Act passed each year.
Courts interpret statute, and their decisions set precedent that guides later cases.
HMRC practice (manuals, statements, guidance) explains how HMRC applies the law. It is not law itself.
If HMRC guidance conflicts with statute, statute prevails.
TX-UK examines the Finance Act 2025 for sittings from June 2026 to March 2027 and in June 2027.
Legislation that has not yet taken effect is not normally examined until it does.
Tax avoidance is arranging affairs to reduce tax within the law.
Tax evasion is deliberately misleading HMRC to reduce tax. It is illegal.
The GAAR allows HMRC to counteract tax advantages arising from abusive arrangements.
Rates and allowances are given in the exam, so concentrate on concepts and definitions here.
Objective test questions are all or nothing, so read every option fully.

Common mistakes

Treating HMRC manuals or statements as law. Fix: Remember they show HMRC's view only. Law is statute and case law.
Saying statutory instruments are not real law. Fix: They are secondary legislation and have legal force, within the power the Act gives.
Saying HMRC manuals are legally binding. Fix: Remember that manuals are internal guidance made public. Only statute and case law bind.
Thinking a statement of practice overrides the Act. Fix: State that if practice conflicts with the legislation, the legislation prevails.
Saying tax avoidance is illegal. Fix: Avoidance is legal in form but can be counteracted. Only evasion is a crime.
Treating all tax planning as avoidance. Fix: Using ISAs, pensions and allowances as intended is acceptable planning.

Exam tips

In objective questions, look for the word 'binding'. Only statute, valid statutory instruments and higher-court precedent bind.
In written answers, give one example per source, such as the Finance Act 2025.
Remember the examined cut-off: legislation not yet in effect is not normally tested.
Do not cite case names or section numbers unless you are certain. Explaining the principle earns the marks.
Keep answers short. List the source, who makes it, and its status.
Learn one sentence: only statute and case law are binding; all HMRC practice is persuasive only.
In objective questions, eliminate any option that calls a manual, statement of practice or brief law.
In written answers, give the status, then the practical effect, then the conflict rule. That earns the marks.