Directors and self assessment

Directors and self assessment

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Hi,

We file self assessment tax returns, or indeed advise our clients that they need to if they are a company director and have a small salary and dividends, even where there is no tax to pay.

A lot of our new clients have not been advised or indeed done this by previous agents.

One such client has now been penalised from HMRC for not filing.

What do you do and how do you dal with new clients that have never filed previously?

Lorraine

Replies (9)

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By The Innkeeper
02nd Aug 2012 13:46

contrary

to HMRCs view there is no statutory obligation to file a SA return merely because you are a director. There will be if the invidual is into higher rate . As far as the client who has received a penalty I would check to see if a 'Notice To File' was issued and is when. There may be issues about non notification of chargeability that need to be considered

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By murphy1
02nd Aug 2012 14:07

Innkeeper,

 

Thanks for that. Are you able to give me the statute for this, as all HMRC manuals  - SAM 100050 specifically states if they have remuneration they do and there lies my problem! Most of the clients are paid a low salary and topped up with dividend.

 

http://www.hmrc.gov.uk/manuals/sammanual/SAM100050.htm

 

I guess this was never a problem until Jan 2012 this year, as no penalty would have been levied in the past where no tax was due.

 

Lorraine

 

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Replying to runningmate:
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By tonycourt
02nd Aug 2012 14:30

Innkeeper is entirely correct, but...

Innkeeper is entirely correct.

The HMRC's SAM instruction is purely internal procedure regarding when to set up an SA record  - it has no rlevance to your question of whether or not a return should be submited.

There is no special requirement for director's to file returns, they are covered by the same rules - (section 7 TMA 1970), as every other taxpayer. There is  a requirement to submit a return only where either:

a form or notice to file has been issued to them by HMRC,

            or, if they have not be sent either of these

they have a tax libilty which they must self-assess

HMRC cannot penalise a director for failing to submit a return unless either of the above circumstances applies

TC

 

 

 

Thanks (1)
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By User deleted
02nd Aug 2012 14:22

Well, the question is whether the client has been penalised for not filing the return or for 'failure to notify'?

If a 'notice to deliver a tax return' ( s.8 of the Taxes Management Act 1970) was issued by HMRC, then the director should have filed the tax return.

Failure to notify (s.7): simply being a director does not autmatically create an obligation under this section.

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By murphy1
02nd Aug 2012 14:33

Thanks.

 

Problem now evident, client received a notice to file, and only told me just now!!

Would have solved my problem before posting this.....thanks again!

 

Lorraine

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Accountants & Business Advisers
By Gladstone
03rd Aug 2012 09:24

Use of 'MUST'

Use of 'must' phrase in the below link suggests that unless you're a director of non-profit organisations like charities/drawing no commercial benefit, you MUST register and file for self assessment if you happen to be a director of a company.  I am confused with the above OP and please clarify.

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

Thanks

G

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Replying to lionofludesch:
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By frustratedwithhmrc
03rd Aug 2012 10:57

Challenge HMRC as there is no statutory basis for this.

Gladstone wrote:
Use of 'must' phrase in the below link suggests that unless you're a director of non-profit organisations like charities/drawing no commercial benefit, you MUST register and file for self assessment if you happen to be a director of a company.  I am confused with the above OP and please clarify.

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

Indeed, I've been through this before with clients for whom a Self Assessment tax return is a pointless waste of time, both for the client and HMRC. When challenged to provide the statutory basis for this "must" HMRC have been unable to do so as there is none.

This is just another example of HMRC making up their own rules to suit their own ends.

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By nautical
03rd Aug 2012 10:17

Just because HMRC say 'must' does not mean it is the law.  They regularly interpret the law to suit their purposes.

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By aj.adams
21st Sep 2013 12:31

I am about to complete a registration for SA form for a director whose whole income has been taxed via PAYE. He is now paying himself an additional dividend which will be taxable at higher rate. Will ticking the box  'I am now a company director'  and dating it 2008 which is when he was appointed, cause any problems ?  As stated above, there has never been any income outside of PAYE.

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