HMRC sending letters to Directors. WHY??

HMRC is sending letters to directors that 2019/20 was the last tax return they expect.

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Hi Everyone. Has anyone else come across letters from HMRC to directors who had salary as well as dividends, but saying 2019/20 is the final tax year that they expect a tax return?

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RLI
By lionofludesch
21st Aug 2020 12:48

No.

Is this for folk who have already submitted returns for 2019/20 ?

Most of mine have already gone in.

I hope they're not hoping to use this halfassed Simplified Assessment system they've set up.

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Replying to lionofludesch:
By RM and Co
21st Aug 2020 12:52

Correct. For those who we have submitted their 2019/20 tax return and they had salary as well as dividends in 19/20.

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Replying to RM and Co:
RLI
By lionofludesch
21st Aug 2020 13:02

Interesting. Without checking, I'm pretty sure all of mine had both salary and dividends but I haven't had anyone crossed off the list.

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the sea otter
By memyself-eye
21st Aug 2020 12:59

yes - I have one who is 'deregistered' - she has a small salary from her property company, dividends from same and is an employee elsewhere.
This following her 19/20 tax return submission.

I will ignore it.

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By Rammstein1
21st Aug 2020 13:43

The couple I've seen are where the dividends have dropped below £2K. I will review them when I do the next accounts anyway.

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Replying to Rammstein1:
the sea otter
By memyself-eye
21st Aug 2020 14:18

could be - my client's dividend was £2k

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By Ken Howard
21st Aug 2020 17:15

Yep, I've had a handful where dividends were £2k or less. Quite pleased not to have to deal with the pantomime of SA returns for directors without any tax liability.

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Replying to Ken Howard:
RLI
By lionofludesch
21st Aug 2020 17:24

Ken Howard wrote:

Yep, I've had a handful where dividends were £2k or less. Quite pleased not to have to deal with the pantomime of SA returns for directors without any tax liability.

I dunno. Most of these returns will be a 15 minute job and completing one is an opportunity to keep an eye on them.

Can we assume that dividends will always be below £2000 ? I think not and I'm surprised HMRC haven't thought of that.

Or maybe I'm not.........

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By richard thomas
21st Aug 2020 18:10

With apologies to lionofludesch I claim some responsibility for this. Until recently if you used the HMRC tool "Do I have to make a return" and you said you were a director, it said "yes". In several cases including most notably Karen Symes v HMRC [2018] UKFTT 42 (TC) at [28] & [29] and Alexander Steele v HMRC [2018] UKFTT 547 (TC) at [27] to [30] and [41] to [48], I pointed out that a director does not necessarily have an obligation to notify liability under s 7 TMA (or, in HMRC-speak, register for self-assessment).

Now if you do the test at https://www.gov.uk/check-if-you-need-tax-return and show your income as less than £50,000 (and possibly under £100,000 - I didn't check that) and dividends less than £10,000 it will say "no". There is no question about directorships.

So I imagine HMRC are going through their records and weeding out of SA those who no longer meet the criteria, and if not, anyone in the position should seek a withdrawal of any notice to file under s 8B TMA - if that is what they or their accountant wants.

Any U/P will be dealt with by a Simple Assessment.

Throughout my time in HMRC and before in IR, Govt policy has been to minimise the number of returns. HMRC have not always followed that policy as in the facts of Goldsmith when they could easily have avoided issuing notices to file.

Now if you don't get a notice to file, which is what happens if HMRC kick you out of SA, you can still make a return voluntarily and it will count as a valid return. Whether you can do it online using your old UTR I do not know, but you can certainly do it on paper.

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Replying to richard thomas:
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By richard thomas
21st Aug 2020 18:12

Quick follow up. The £50,000 threshold is for indentifying possible child benefit HICBC cases.

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Replying to richard thomas:
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By unearned luck
22nd Aug 2020 20:06

I wonder how HMRC will obtain the dividend data to include in the simple assessments. In practice 'deregistered' directors will either submit voluntary returns or their dividends in excess of £2k will go untaxed.*

I don't think that there is a problem in using the existing UTR - I've never had a problem in submitting voluntary returns electronically, which can only be done, of course, with a UTR.

Why 'unique'? Doesn't this quality of a tax reference number go without saying? The DVLA refrains from calling my car reg number unique. I understand that some people have more than one NI number, mainly from the days when P11s and P14s were completed by hand and that this was why NI numbers could not be used for SA. In any event, HMRC seem to used the word to mean the sole number issued to the taxpayer (ie it is intended that a taxpayer should only ever have the one number) which ties into my experience. Bur administrative errors sometimes result with taxpayer being issued with more than one UTR.

*HMRC seem to have discontinued form P810.

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Replying to unearned luck:
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By Paul Crowley
01st Sep 2020 18:41

More than one UTR is usually the result of personal insolvency.

Edit
Also when a fraudulent claim made by third party, not the correct taxpayer

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Replying to Paul Crowley:
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By unearned luck
23rd Aug 2020 10:24

Indeed.

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Replying to unearned luck:
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By richard thomas
23rd Aug 2020 11:24

It's "unique" because before 1996 when SA came in, it was possible to have more than one tax reference in more than one tax office. If you had Schedule D income you would have a file and reference number which started with the unique number for that tax office. If you had Schedule E income you would have a reference number for each employment, also starting with the tax office number.

And if you just called it a TR, some might think you meant a Tax Return. Obviously it should have been called the UC(for Customer)R, but the dumbers-down never spotted it!

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Replying to unearned luck:
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By gillybean04
01st Sep 2020 18:12

The director would still be responsible for reporting the dividend income. It will just be collected via PAYE.

If it can be collected through their code then they'd receive a p800. If it can't, thats when they'd receive a simple assessment.

Unique....pure speculation on my part but I suspect clarity. I imagine asking for your taxpayer reference number would lead to a lot of confusion given VAT numbers, PAYE employer references & NI numbers are all essentially taxpayer reference numbers.

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Replying to richard thomas:
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By Wanderer
23rd Aug 2020 12:37

richard thomas wrote:

Whether you can do it online using your --- UTR I do not know, .

Yes, you certainly can.
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By Matrix
22nd Aug 2020 07:57

They have been taking Directors out of self assessment for years. This is not new.

It is not ideal as you then don’t get a tax return fee for any personal tax planning and have to call up with the dividends figure.

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By Crouchy
22nd Aug 2020 12:22

we've had a few of these letters, all of the clients had dividends over £2k and tax to pay

we've also had quite a few tax calcs from HMRC where they have treated clients as PAYE only and have issued tax refunds, they have totally ignored self assessment and dividend income .....and all tese have usually been around a month after filing the SA return

who knows what HMRC are up to

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Replying to Crouchy:
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By Paul Crowley
22nd Aug 2020 15:51

I have had a couple of those as well
Would'nt it be nice if HMRC PAYE and HMRC SA could somehow be joined together

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