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Charging directors for their tax returns

How do others deal with the charging of directors for their personal tax returns?

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I would be interested to hear how others charge directors for the preparation of the personal self assessment returns. 

Do you invoice the company for everything? If so, how do you deal with the personal tax return element of the fees?

 

if you charge separately I would be interested to hear what sort of fees you charge for a director with only salary and dividends from the company? 

 

We currently charge directors a separate fee, in a nominal amount, but as we are now approaching the end of the tax return season would like to consider reviewing this for the new tax year. 

 

TIA

Replies (14)

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By bernard michael
07th Jan 2017 11:23

Go for it Portia - it's too good to miss

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By Matrix
07th Jan 2017 11:44

I usually charge £200 and bill the Director directly (£100 if basic rate taxpayer but only have a few). If they pay from the company then I book to DLA. One client company pays for all 3 Director tax returns and the expenses are included on P11Ds.

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By nick farrow
07th Jan 2017 13:40

where co pays we include personal element on p11d with class1a implication

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Jennifer Adams
By Jennifer Adams
07th Jan 2017 14:08

Nick is right - you should charge separately. Its not a company cost but a personal benefit if the company pays and should go on the P11D.
I charge a separate £50 to the directors personally as its usually just the 2 entries - salary & divs

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Replying to Jennifer Adams:
RLI
By lionofludesch
07th Jan 2017 14:46

That's about the mark I'd go for if it was just salary and dividends.

Obviously, if there's more to it then a bigger fee is appropriate.

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By Kaylee100
08th Jan 2017 17:07

If it's only client company salary and dividends, we don't charge.

Anything else we charge the director personally. Whilst that means it's quite a small fee in most cases, some are far more complicated.

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Brunel
By Brunel
09th Jan 2017 22:08

Separate engagement letter for personal tax with Ts&Cs.

But if no fee is charged, there's no consideration and it's not a contract?

Small separate bills to directors are a pain.

Most clients are on monthly billing all-inclusive, it's fiddly dealing with this.

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Replying to Brunel:
RLI
By lionofludesch
10th Jan 2017 07:20

Brunel wrote:

Separate engagement letter for personal tax with Ts&Cs.

But if no fee is charged, there's no consideration and it's not a contract?


Good luck with getting that argument past HMRC, if challenged, when you're charging the company two or three grand.

It's hard to argue that the work on the directors' return wasn't included in the price.

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Replying to lionofludesch:
Brunel
By Brunel
10th Jan 2017 08:01

Not suggesting that we shouldn't charge directors, we do.
It's just extra admin for not much money.
Contract/consideration issue was just trying to console myself there's some point to the extra admin other than HMRC requirements.
Someone else commented about PI aspects, good point.

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Replying to Brunel:
Tornado
By Tornado
10th Jan 2017 09:10

The PI aspect is important which is why professional Accountants should never do anything for free, at least a nominal charge should be made. Individual policies will vary of course, so check your own to see exactly what work is covered by your policy.

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Tornado
By Tornado
09th Jan 2017 23:18

Separate billing to directors for Tax Returns, say £100.00 each plus VAT and expect payment from personal resources.

Free preparation of Tax Returns may not be covered by Professional Indemnity Insurance and may still be regarded as a taxable benefit. Even a nominal charge would demonstrate that the work was carried out in a professional capacity.

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By chewmac
10th Jan 2017 09:17

Interesting. I thought I was doing the directors a favour by rolling up their fee in with the usual monthly compliance fee. Looks like I best start debiting £50'ish to directors loans to cover my own back

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By JCresswellTax
10th Jan 2017 09:22

Of course no one does the persona tax return for 'free'.

They are doing it as part of the company fee so there is definitely a benefit in kind on the director.

The only reason someone would argue it was 'free' is because they are receiving a fee from the director's limited company.

Would you do the tax return for free if you didn't have the company fee? Of course you wouldn't. So you don't do the Return for free at all!

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By dbowleracca
10th Jan 2017 09:46

Thanks everyone.

We do already charge separately, but in a nominal amount of say £80 per director. A number of client we take on have had it all billed to the company, and I was wondering how these accountants might have dealt with this in terms of the benefit in kind - I suspect they haven't!

Another part of the reason for looking to charge separately is also for KPI purposes. If the fees are only nominal, or not charged separately at all, it makes it hard to determine the profitability of each service line and also the total fees you achieve each year from each service you provide.

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