This from HMRC web site. They've still got it wrong
2. Who must send a tax return
You can send your tax return online or using paper forms but you must be registered for Self Assessment.
You must always send a tax return if you’re:
- a self-employed sole trader
- a partner in a business partnership
- a company director
Replies (13)
Please login or register to join the discussion.
Question?
A brief search will turn up a load of questions saying that HMRC have had this wrong for years. It is extremely unlikely that HMRC will change their view on this. Is there a particular reason you have chosen to raise this now?
I Expect
I expect it has been posted, just to highlight yet again, how wrong HMRC seem to be getting a lot of things all of the time, lately.
Be careful, very careful
If you rely upon there being no obligation for a director to register for self assessment then be ever so careful to make sure that HMRC have not themselves added the director to self assessment and issued a notice to file a return. Some directors see tax correspondence (eg. notice to file a return) and just think "the accountant will deal with that they will have had a copy" and do no more.
Then, the advisor, having assumed that no SA return notice has been served on the director (and not told by the director that a notice has been received) will do nothing and the director ends up with penalties for late-filed SA return.
As an "insurance policy" against this happening (and the advisor getting blamed by the director) one of two things is recommended:
Make it absolutely clear to all directors that they must bring to the advisor's attention all and any HMRC correspondence, especially notices to file SA returns and if they don't then they (and they alone) will be responsible for any late filing penaltiesActually register directors for SA ("unnecessarily") to bring certainty to the situation as to any obligation to obligation as to SA return filing
I appreciate that the second option could be subject to criticism for "work creation" but I have a specific case where I followed that route and as a result actually did save the director from penalties for non-filing / late filing of an SA return. The director concerned was adamant that she was NOT in SA and had received no notice to file an SA return, it was December 2011. So I attempted to register the director for SA and found that, online, it was impossible. It turned out that the reason that I could NOT register the director for SA was that in fact the director was already registered for SA but did not remember / recall / know this. Result: penalties averted. This was with a normally fairly on-the-ball director who I'd not expect to get something like this wrong.
I thought...
...that the concensus of most previous threads on this subject was:
there are specified cases (sole trade, partnership, trust, etc.); andthe catch all - and any person which HMRC requires one from.
Since HMRC believe that all directors are up to no good, they indicate that an SA return is required from all directors. However, they aren't exactly pro-active about registering all those directors they haven't yet had dealings with and, if they were that serious, I'm pretty certain we'd all have had a lot more angry directors waving penalty notices at us.
That said, if you use something like IRIS for personal tax, the time cost of doing a straight forward SA return is negligible. Some people might even feel more important telling their mates 'down the pub' they have to do a tax return (nowt so strange as folk!).
Getting a bit weary of this
There is no legal definition of 'director' in UK law. If you can't define what a director is, how do you insist they file an SA return?
No definition?
Apart from in the Companies Act you mean?
The same Act that has an entire Part on directors that includes such things as maintaining a register that identifies who are the directors.
There is a definition for tax purposes
Well there are various definitions for tax purposes, but they all say largely the same thing. Probably the most relevant one for this purpose is ITEPA 2003, section 67. See: http://www.legislation.gov.uk/ukpga/2003/1/section/67?view=plain
Read that again
Not "acts as" a director. "occupies the position of". If it was only acts as then there wouldn't be a need for the separate definition of shadow director.
Then you have the section of Part 10 that requires companies to keep a register of those who "occupy the position" of director. Not to mention that the details of said register are reported to Companies House on an annual basis. I'd say director (as opposed to shadow director) is pretty clearly defined.
That's even ignoring the fact that what you actually said was there is
Even if it was unsatisfactory (and I don't accept it is) I'm pretty sure that when a law includes a section heading "Meaning of [x]" then that is unequivocally a legal definition of [x]. ...no legal definition of 'director' in UK law...
I'm pretty sure it would be possible to amend the taxes to require directors as defined in Companies Act 2006 section 250 as required to complete a return. But there is no such amendment as yet, so HMRC's position continues to be wrong.
Well that's your view
You are of course entitled to your view. Mine is different. I do not regard the definition of director as one that can be applied with any rigour. I consider it equivalent to the duck test, if it looks like a duck, walks like a duck and quacks like a duck, it's a duck. Try getting that to stand up in court. There are many parts of UK legislation where things are defined unequivocally, but they end up failing in court.Not "acts as" a director. "occupies the position of". If it was only acts as then there wouldn't be a need for the separate definition of shadow director.
Then you have the section of Part 10 that requires companies to keep a register of those who "occupy the position" of director. Not to mention that the details of said register are reported to Companies House on an annual basis. I'd say director (as opposed to shadow director) is pretty clearly defined.
That's even ignoring the fact that what you actually said was there is
Even if it was unsatisfactory (and I don't accept it is) I'm pretty sure that when a law includes a section heading "Meaning of [x]" then that is unequivocally a legal definition of [x]. ...no legal definition of 'director' in UK law...I'm pretty sure it would be possible to amend the taxes to require directors as defined in Companies Act 2006 section 250 as required to complete a return. But there is no such amendment as yet, so HMRC's position continues to be wrong.
Cheers, Neil
Facts are not views
Your view that a definition that is part of a law is not a legal definition you mean? You are of course entitled to your view. Mine is different.
But what if it is officially identified as a duck in the Annual Return to Duck House in Cardiff. You know, in the same way that directors are identified in accordance with Part 10 of the Companies Act 2006, as I have already pointed out twice. I do not regard the definition of director as one that can be applied with any rigour. I consider it equivalent to the duck test, if it looks like a duck, walks like a duck and quacks like a duck, it's a duck.
Are you really saying that someone who is recorded as a director at Companies House wouldn't be recognised as a director in a court of law? Because if someone being recorded as officially being something in the records of a government agency isn't enough for a court of law then I think the legal system is in big trouble.
Big trouble
Companies House are responsible for maintaining the record. They are not responsible for verifying the true status of the individuals that are reported to them as being directors of a company. Neither are they responsible for ensuring that all of the directors of the company are registered. So all we have is a partial record of those people who have self reported as directors of a company. That still doesn't define the characteristic of a director. Are you really saying that someone who is recorded as a director at Companies House wouldn't be recognised as a director in a court of law? Because if someone being recorded as officially being something in the records of a government agency isn't enough for a court of law then I think the legal system is in big trouble.
The legal system knows that the identification of a director is a thorny issue. We are all aware of directors in name only who actualy take no part in the administration of a company and equally shadow directors who do run companies but are not registered at Companies House.
Directors are taxed differently to non-directors
Because, in some respects, directors are taxed differently to non-directors, the question raised about the definition of being a director (or not) is a very important one.