Inland Revenue - Gone Fishing?

Inland Revenue - Gone Fishing?

Didn't find your answer?

I received an unsolicited standard letter from the Inland Revenue yesterday.

The first half was re-assuring, wondering if I might have paid too much tax - fat chance of that, I thought!

Turning the page, the true reason for this fishing became more apparent, as the Revenue then speculated that I might have paid too little tax.

No problem so far, but what followed was a list of categories of people from which the Revenue required an annual Tax Return.

I count myself lucky as I have never been sent a Tax Return to complete. I don't feel lucky because I have anything to hide. On the contrary, my tax affairs are very straightforward given that I am an employee paid under PAYE. However, since being appointed a Company Director in August 2003, I have been expecting the arrival of my first ever Return, and my perception is that once the IR have you on their little list, you will be completing the wretched things for the rest of your days. And however simple one's affairs, there is obviously an annual time, cost and hassle implication in this.

My question is whether, given that Company Directors are listed in the IR Fishing letter as a category from which the Revenue requires a Tax Return, am I now obliged to write to them to request one? I am loathed to do so - see my reasoning above - and given that the names and addresses of Directors are in the public domain via Companies House, I hardly feel like I should have to respond to a random fishing expedition, when the IR could easily obtain this information anyway.

One slight complication:-

I invested in shares in my Employer's Company following an MBO in 2001, and have been paying interest on the loan I took out to buy the shares ever since. I have never received tax relief on this interest (though I understand it is, theoretically available). If I bite the bullet and request a return, would I be able to claim relief on prior year's interest payments on this year's return? Or have I now missed the chance to get the previous year's relief?

Thanks in anticipation.

A Taxed Director
Anon

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By martinfoley07
25th Sep 2006 13:21

ouch, for a company director........
..... that is quite a tale of how/why you do not wish to complete a tax return, anon!!!! You and the rest of humanity, I suspect (me included).

Firstly - if you have no tax to pay, you do not have to complete a tax return unless you are sent one. Full stop.

It doesn't matter that HMRC policy is to send tax returns to all company directors (for obvious reasons, to be honest). That may be their policy, and their policy is their business, but it is not Law.

It is not that uncommon for clients to receive three letters in same tax year from HMRC computer - one saying you must complete a tax return, one saying you do not need to complete a tax return, and one saying why haven't you completed a tax return!! To this we can now add the various types of "enabling" letter.

If you are a director/shareholder as part of an MBO team, to be honest I am somewhat astonished you do not have an accountant - have you not talked to the company's accountant? Even if you are a small shareholder, given the fact you are a director means they will surely have a free of charge meeting with you to go through your position, including any loan interest etc etc. Give 'em a call (albeit with the understanding, the company is their client, not you) amd I'm sure they will give you good, free advice.

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