Form SA1 Directors

Form SA1 Directors

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Are others completing form SA1 for directors even where the facts are there is no requirment under the Taxes Management Act? What is best practice? I note that In the past it seemed HMRC issued Returns following completion of the CT41g but since last year that doesn't appear to be the case.

I understand that once issued with a return you are obliged to complete one so If HMRC wanted a return for all directors presumably they would have left the system as it was.

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Euan's picture
By Euan MacLennan
02nd Aug 2011 13:39

Why?

Why on earth would you register someone for the chore of completing annual self-assessment tax returns "where the facts are there is no requirment under the Taxes Management Act", unless you are just trying to increase your fee income?

Yes - if a tax return is issued, you must complete and submit it.

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By thacca
02nd Aug 2011 14:18

Why

Maybe it's easier to register them all than create a system for monitoring whether they are required. For example I may not know the level of dividends until I receive their accounting records. I'll be honest I'm not sure whether a dividend = requirment for a tax return or only a dividend that courses higher rate tax. If someone could clarify I'd be grateful.

If you speak to HMRC on 0845 900 0444 they are sure that a director requires a Tax Return regardless. It may be easier to take their view than bother argueing with them.

Fee's, I do charge a nominal amount for a directors tax return. However It is only a nominal amount and I would probably quote the same overall fee regardless.

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By petersaxton
02nd Aug 2011 14:46

Directors

http://www.hmrc.gov.uk/sa/need-tax-return.htm

"You must complete a return if you're any of the following:

a company director (unless you're a director of a non-profit organisation, for example a charity, and don't receive any payments or benefits)a minister of religion (any faith)a name or member of Lloyd's"

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By thacca
02nd Aug 2011 15:40

Company Director

Yes but that is HMRC making up their own rules. The legislation does not say that.

I assume Peter quoting that means he would always complete a SA1 where as Euan wouldn't. So we're split so far.

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By petersaxton
03rd Aug 2011 06:30

Not always

I've had HMRC say that some company directors don't have to complete a tax return so in that case I wouldn't - unless there was good reason to do so.

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By MARKJET
03rd Aug 2011 16:23

What about penalties?

We have several directors who do not prepare tax returns but obviously if they had tax to pay we would send a return in .

With 2010/11 returns now getting an automatic penalty for late submission regardless of tax liability we were considering whether SA1's should be submitted for all directors.

If as above legislation does not require it then we probably won't , could someone please point to the relevant section in TMA.

 

 

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Euan's picture
By Euan MacLennan
03rd Aug 2011 17:47

S.7 TMA 1970 Notice of liability to income tax and capital gains

I cannot find an updated version online, but s.7(1)TMA 1970 says:

"Every person who -

  (a) is chargeable to income tax or capital gains tax for any year of assessment, and

  (b) has not received a notice under s.8 ... requiring a return for that year ...,

shall, ..., within six months of the end of that year, give notice to an officer of the Board that he is so chargeable."

There are exceptions for sources of income taxed under PAYE and income taxed at source and dividends if not liable at a higher rate.

Directors receiving minimal salaries do not even meet the requirements of s.7(1).  Directors receiving salaries, dividends, etc., within the basic rate band are covered by the exceptions.

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