Director Tax Return

Director Tax Return

Didn't find your answer?

Hi, I am a director of a now non trading Ltd company.  The company never made enough money to pay any salaries or dividends and only traded for just over a year.

My accountant says I am risking a fine by not completing a personal tax return, but I really don't see the point if I never made any money from the company.

Can anyone advise please?

Thanks,

Edna

Replies (16)

Please login or register to join the discussion.

By petersaxton
13th Jun 2013 14:37

have faith

in your accountant

or risk a fine

Thanks (0)
By kenny achampong
13th Jun 2013 14:54

Really ?

I didnt think there was any law that says you have to do one ?

Thanks (0)
By johngroganjga
13th Jun 2013 14:59

You only have to complete a return if either of the following applies:

HMRC have issued you with a notice to complete a return;You will have an unpaid tax liability for the year.

Your accountant will be able to explain which of these reasons applies in your case and thus what the rationale behind his advice is.

 

Thanks (0)
avatar
By tonycourt
13th Jun 2013 15:12

This topic has cropped up a few times before but here's a summary of the position:

contrary to advice on HMRC's website and other publications there is no requirement to complete a tax return solely because you are a director, however,where HMRC has issued you with a notice asking you to file a personal self-assessment tax return you must submit one, where HMRC has not issued a notice you  have to submit a return  where you owe tax for the year in question.

Thanks (0)
avatar
By Evil Edna
13th Jun 2013 15:00

My accountant not 100% sure :0)

So I'm getting some second opinions.  Thanks for your responses so far.

Thanks (0)
avatar
By The Innkeeper
13th Jun 2013 15:07

pardon

There have been many postings here that quite catagorically state( correcetly) that contrary to the view of HMRC there is no statutory need to file a return just because you are a director

edit beaten to it!

Thanks (0)
By petersaxton
13th Jun 2013 16:02

Not enough information

The OP hasn't given any information about his financial circumstances other than those relating to this company.

Thanks (0)
avatar
By pembo
13th Jun 2013 16:18

urban myth

about directors. Tonycourt summarises it well.

http://www.hmrc.gov.uk/sa/need-tax-return.htm#1  is typical HMRC propaganda. The law is set out at sections 7 & 8 TMA 1970. I usually prefer to advise on the position in law rather than HMRCs spin.

Thanks (0)
avatar
By Evil Edna
13th Jun 2013 16:23

Thanks for your replies everyone

I remained in work at my current employer earning a salary paying PAYE whilst running the business with my partner.  Neither of us took a salary or any dividends from the company.

The venture was a bit of a disaster from the start, only making enough money to just about keep going before we decided to call it a day.  All we succeeded in doing was blowing our savings and getting into debt!

Thanks (0)
avatar
By nogammonsinanundoubledgame
13th Jun 2013 17:45

Slight correction to tonycourt

Re. third bullet point.  If HMRC have not issued a notice to file, but you owe tax for the year in question, then your obligation (so far) is limited to notifying HMRC of that fact.  That notification is likely to result in HMRC then issuing a notice to file a tax return, particularly if you provide that notification by filing form SA1.  But otherwise it is by no means certain.  If the tax is small and capable of collection by PAYE coding adjustment then this would be an alternative route.  Once they issue a notice to file in response to a notification of liability, then of course you are back to the second bullet point.

Re. second bullet point.  If HMRC issue a notice to file when they should not have done so, I believe that there is now a route to having the notice revoked and thereby escape the requirement to file.  I *think* that this came in as a means of diluting the effect of the late filing penalties shooting up from £100 to £1600.  I feel on slightly shaky ground here - not sure if it only applies after the tax return is late.  Anyway I don't think that this would help the OP, because if she was a director of an active company in the period, regardless of the financial amounts, HMRC will (on being aware of this) insist on the return.

With kind regards

Clint Westwood

Thanks (0)
avatar
By Paul Soper
13th Jun 2013 18:09

Future relief?

You mention losing your savings in the project - if you supplied capital to the company be way of shares it may be possible to not only claim a capital loss but convert it into an income loss which, via a tax return, could salvage a repayment from the mess.  If you lent money to the company that you lost this will also give rise to a capital loss, normally to be claimed within 6 years and the easiest way is through the medium of your tax return (although a stand-alone claim could be made) - this, unfortunately cannot be converted into an income loss.  It may well be in your interest to file a return.

The current Finance Act does indeed contain provisions, by the way, for HMRC to withdraw the requirement to file a return if it is not necessary.

Thanks (0)
By petersaxton
13th Jun 2013 18:19

Doing a tax return

I think arguing with HMRC over whether a tax return is required would take more time than completing a simple tax return. Is it worth the effort?

Thanks (0)
Replying to Tax Dragon:
avatar
By tonycourt
14th Jun 2013 10:50

You can get clearer than that.....

....HMRC are wrong and always have been on this point. The horse's mouth is the law not HMRC. Having said that in most cases a director will be required to make a return because they will either been sent a notice to file one by HMRC or have additional tax to pay.

Thanks (0)
Replying to Tax Dragon:
avatar
By frustratedwithhmrc
14th Jun 2013 12:06

Just because HMRC say so doesn't make it so

Hugh Jego wrote:

No. You definitely need to complete a Tax Return.

See HMRC's website at http://www.hmrc.gov.uk/sa/need-tax-return.htm  where it says "You must complete a Tax Return if you are any of the following: (1) a company director".

You can't get clearer than that, it's straight from the horse's mouth.

HMRC are free to hold and express any opinion they like, but as a government agency their delegation of authority is limited to that laid down by statute.

HMRC have repeatedly been told that there is no statutory basis for someone to provide a return purely on the basis of being a company director.

That provision of returns by directors makes HMRC's life easier does not make it a law of the land.

Only parliament is empowered to make law.

Thanks (0)
avatar
By nogammonsinanundoubledgame
14th Jun 2013 12:54

@ Hugh Jego

The fundamental flaw in your post is the definition of horse.

The "horse's mouth" is parliament, not HMRC web-drivel.

Their statement is, as you say, a model of clarity.  The problem is that clarity and accuracy do not necessarily coincide.

With kind regards

Clint Westwood

Thanks (0)
avatar
By Evil Edna
14th Jun 2013 13:06

We haven't received any notices from HMRC yet

And there's definitely no additional tax to pay as all we did was lose money.

 

Thanks (0)