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Penalty for late filing if no tax return issued?

Can someone receive a penalty if they want to prepare a tax return for mortgage purposes?

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A client is a company director, has been since 2002.  Has never been asked by HMRC to prepare a Self Assessment tax return.  However through dividend strategy and avoiding going into Higher Rate tax, he has always avoided any actual liability to tax during these years.

He is now wishing to remortgagae and would like to register for Self Assessment from 2015/16 (2016/17 he will have to anyway because of the new dividend tax to declare), so that he can validate his income to mortgage companies with the classic HMRC SA302.

Because HMRC have not actually requested he complete a tax return and because he has not actually had a liability to tax in the year to 2016, is there still a possibility of penalty due to the fact that he is a company director and should have been completing a return regardless of tax liability?  What would be the current penalty position?

Hope this makes sense !

Thanks !

Replies (13)

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By Tim Vane
20th Jun 2017 23:42

I can't decide if this a wind-up or if you are just unable to read the large font headline story on the home page.

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Replying to Tim Vane:
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By quintodc
20th Jun 2017 23:47

Wow, lol, I never see the AW homepage - I just always go to any answers...that is very funny though...thanks for the laugh :)

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Replying to quintodc:
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By quintodc
20th Jun 2017 23:52

Would still appreciate advice if the client chooses to file a 2015/16 tax return for the sake of mortgage purposes. No fine due presumably?

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Replying to quintodc:
By Paul D Utherone
21st Jun 2017 11:38

Only potentially for late notification, which is tax based and you say there's no tax due, so Nil

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By Chris Mann
21st Jun 2017 09:26

This should help
https://www.accountingweb.co.uk/tax/hmrc-policy/tribunal-company-directo...

Please don't listen to "advice" from mortgage advisers (term used very loosely)

Edit; from a brief visit to your Aweb account I see you qualified as an ACCA in 2000? Do correct me if I'm wrong.
The enquiry you've raised here is pretty basic stuff for an ACCA, in my humble opinion.

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Replying to Chris Mann:
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By quintodc
21st Jun 2017 14:19

really? ok.

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Replying to Chris Mann:
Quack
By Constantly Confused
22nd Jun 2017 10:14

Chris Mann wrote:

Edit; from a brief visit to your Aweb account I see you qualified as an ACCA in 2000? Do correct me if I'm wrong.
The enquiry you've raised here is pretty basic stuff for an ACCA, in my humble opinion.

Leaving aside the fact that 'in my humble opinion' is of the same ilk as 'I'm not a racist but' and 'I wouldn't say she was fat, but', and the fact that other users have expressed varying opinions, please don't do this sort of thing.

If you make people feel stupid for asking what you consider to be a 'basic' question then they will stop asking, but won't be any wiser. They could then end up doing something wrong because they were too embarrassed to ask for clarification. We need a 'no stupid questions' atmosphere on here for the good of the profession.

Why were you going through their profile anyway, unless you were hoping to find a reason to have a dig? I'd not got you down as one of the people who do things like this, please don't become one.

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By justsotax
21st Jun 2017 09:34

I would have agreed with you Chris, but having read another aweb thread (having had the same issue myself yesterday) it seems it may not be a straight forward issue.

The thread I read suggested that if you try and register someone who shouldn't be on SA (or their reason is just they need an SA302) then they will not do it, ending your hopes of getting a SA302.

And it wouldn't be inconceivable to imagine the Revenue trying to charge a penalty if you did try and register them on the basis that they are a director.

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Replying to justsotax:
By Paul D Utherone
21st Jun 2017 09:48

But it would be a late notification penalty if they did which is tax based, and there's no tax liability according to the OP

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Replying to Paul D Utherone:
By SteveHa
21st Jun 2017 15:50

Late notification of what, exactly? If, as in the OP, the director is wholly salaried PAYE, with no other liability, they have no requirement to register in law, and so cannot possibly be late to register.

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Replying to justsotax:
abc
By Kim Jong Un's Hair
21st Jun 2017 11:49

As Paul says. They can try all they want but they don't have any legal basis for doing so.

Here's what will happen.

1. You register.
2. You receive a notice to file.
3. You have to file within 3 months of that notice, otherwise late filing penalties will apply.
4. You may receive a penalty notification regarding the potential lost revenue which Paul refers to. This is tax geared.

End

Just register online and it'll go through automatically anyway.

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By Matrix
21st Jun 2017 13:35

When you complete the SA1 put 6 April 2015 as the date he became a Director. HMRC may or may not ask for earlier returns, they did for my client and would not cancel them, there is an office in Southampton which issues notices to naughty Directors. (Would like to think they are out of a job after that tribunal case.)

Better still, get the mortgage company to accept an accountant's reference instead.

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By quintodc
21st Jun 2017 14:25

Thanks for all responses, really helpful. I think I will suggest they register for just 2016/17 for new dividend tax and use acc reference for 2015/16 to save any potential hassle...

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