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Tax returns for directors

Tax returns for directors

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We have several director/shareholder companies where the directors take a small salary and dividends (and have no other income) which leaves them well below the higher rate tax band and therefore not liable to personal tax and they have not been requested to complete a self assessment tax return by HMRC - so a return isn't submitted.  Details of the directors appeared on the CT41G when the company was formed so HMRC had the chance to ask for returns.  Despite the HMRC website saying all directors must submit tax returns I've been fairly sanguine about this for 2 reasons - firstly, there is no loss of tax to HMRC and therefore no potential penalty under self assessment and secondly we have had other cases where the director/shareholder having been asked to submit a return is then subsequently informed by HMRC that they no longer want a return.  The director/shareholder is sanguine about it because he doesn't have to pay to have a tax return submitted.

My concern now however under the new self assesment penalty regime is that penalties can be imposed even where there is no loss of tax - so is there a danger that HMRC will fine directors for not informing them that they are directors?

I'm not a believer in telling clients they need a service when they don't so not sure where to go on this one?

Just wondered if anyone out there had already considered this?


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By Chris Smail
28th Sep 2011 17:08

It is policy not law

Despite the opinion of the HMRC staff their guidance is only opinion and sometimes their own policy. The legislation says that if you are asked to complete a return then you must do so.

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Euan's picture
By Euan MacLennan
28th Sep 2011 17:23

No - directors are not legally required to submit tax returns

This has come up so often.

Look at this answer on another thread


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