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Who should complete a tax return?

Who should complete a tax return?

The above says that you need to submit a tax return if you are a company director or have income of £10k or more from savings and investments. There's other conditions but these are the conditions that affect most of my company director clients.

If you have submitted a tax return previously and HMRC say that they don't want a tax return in future do you only have to submit a tax return if there's a new source of income (what if that source doesn't result in extra tax?) or the current sources of income mean you have tax payable? I suppose I should still review the position in case there is a refund of tax.


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19th Dec 2011 11:48

This has been covered so many times

s.7 TMA 1970, Notice of Liability to Income Tax and Capital Gains Tax, sets out the legal requirements to notify HMRC if you have not been issued with a tax return under s.8, Personal Return.  There is no mention of directors anywhere.  There is no legal requirement for company directors per se to submit tax returns.  Similarly, nowhere does it mention anyone with savings income of £10,000 or more.  Indeed, s.7 specifically excludes cases where income is deducted under PAYE or where income tax is (treated as) deducted at source (savings income and dividends) unless the individual is liable to higher rate tax.  Full stop.  End of story.

The HMRC guidance may set out HMRC's policy, but it should not be confused with the law.

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By SteveOH
19th Dec 2011 13:11

I know that Euan is correct but......

I also know what clients are like. They get a penalty notice from HMRC saying that they should have submitted a Tax Return and it doesn't matter what I say about HMRC getting it wrong, the client will assume that it is ME that has it wrong. Then there's all the hassle of appealing against the penalty.

So, for all my director clients, I submit a Tax Return anyway; even if legally they don't need to.

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19th Dec 2011 13:31

Some confusion

If a tax return is issued, you must submit it.  No-one would say otherwise.

If a tax return is not issued, the person is not in self-assessment and a penalty cannot and, in practice, will not be charged.

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By Monsoon
19th Dec 2011 13:34


If they get a penalty notice, then surely that's because a Notice to Complete has been issued? In that case, then sure, a tax return needs completing.

However, there is no obligation to register for SA as a director unless there is untaxed income. If a return is issued it has to be done.

As per Euan, we only complete directors SA if necessary and I've never had a problem with the others.

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By Monsoon
19th Dec 2011 13:35

Beat me to it!

Euan you beat me to ti!

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By DMGbus
03rd Feb 2012 12:25

Risk - new for 2011 returns

There is a risk of a £100 penalty - even if no liability & no legal obligation to notify required to complete a Self Assessment Return...

Director says no untaxed income, not liable to higher rate tax - so don't notify HMRC / don't complete form SA1HMRC, presumably from CT41G, decides to issue a Self Asessment Return notice to the directorDirector either doesn't receive (or receives and remembers "I signed a form so acountant gets copies of everything") a notice to deliver a SA return [client wrongly thinking about the 64-8 signed re: CT and VAT also covers his personall tax]Advisor is therefore unaware of obligationAdvisor can't look up client(director) on agent's SA client list to see if a return issued as advisor not got a UTR for the clientClient doesn't complete an SA return by 31st January 2012.Client gets a fixed pemalty of £100.

That's why SteveH has the correct approach / practical answer to this problem, but I don't like the extra costs being imposed on client - as in cost of preparing a SA return when of seemingly no added value to the client or HMRC.   I suppose the more avaricious of us should be very enthusiastic about this diliemna and it's a great selling point to get more paid for work out of a client, and thank HMRC for introducing the evil new rule that a penalty can be imposed even when no tax liability arises.  I suppose it's a bit like the ESC16 controversy - someone within HMRC likes imposing otherwise unnecessary accountants fee costs on small businesses (as in ESC16 must incur liquidator fees if proceeds > £25k) (also as in iXBRL). 

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19th Dec 2011 13:59


There is a problem with SteveOH's and DMGbus's "practical" (but incorrect) approach.

How do you file a SA return without knowing the individual's UTR?

If he has got a UTR, a tax return will almost certainly have been issued and we all agree, must be submitted.  The only other possibility is that he used to be in self-assessment, but is no longer required to submit a return, in which case you would surely have had agent authorisation and can check whether a return was issued.

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22nd Dec 2011 10:04

Isn't it just simpler... file one for all directors. If they're on basic salary + dividends, there's stuff all work involved in doing so. It also helps with those who would otherwise go out and do something without thinking that may affect their tax liability adversely.

We chuck it in as part of the job with no separate fee and it's a great (non-!)selling point in that case. Oddly enough, the fact that they have to fill in a tax return fills some of these directors with a disproportionate amount of self-importance.

In my opinion, it would simplify the whole situation if everyone was required to file a return once a year (simplified to x pages for PAYE). You'd never get returns creeping out of the dark corners, grasped in th e grubby mits of a dickensian scallywag tradesman.

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By DMGbus
03rd Feb 2012 12:28

HMRC again say a SA rtn required!

Today HMRC are again stating that ALL directors (with minor exceptions) "must" complete SA returns:

 " Check if you should have sent a tax return

You may have thought that you didn't need to send a tax return this year, because your circumstances have changed. You'll now receive a penalty notice as your tax return is late.

Check the table below to see if you should have sent a tax return for 2010-11. If the answer is yes, send it online as soon as you can. "

 "  Company director  ... 

   You were a company director (unless this was a non-profit organisation and you didn't receive payments or benefits)   "

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03rd May 2013 08:31

There is the law........... and there is HMRC.

As a director, I have always filled out a return.  Maybe I didn't need to, but from what I read there was a requirement there, even if some contrary sentences.  There is also a general view of not winding up the HMRC, not provoking, and leaving them to hunt others while I get on with my company business. (eg Arctic IR35 .... right they were but what a devastating fight).

Listening to the above, it is perhaps fully correct and legal that, for those not receiving a letter/return from HMRC to fill out, there is no need to waste your time on the thing.  And they will go along their merry way, happily free of that horrible burden each Christmas.

But that HMRC animal, can be a rather aggressive tiger that you really do not want chasing after you, and when the teeth bite deep into your soft areas, it is no good saying "My accountant said I did not need to fill out this and that forms."  The tiger is awfully hard of hearing when it has the taste of blood in its mouth, and it has an awful huge appetite for blood and flesh.   It is the director that has to cough up, not the accountant.  Therefore the director needs to decide whether it is worth the risk.

We now have the additional burden of RTI, which highlights directors nicely for the tiger's computers, and I am sure there will be a whole load of red flags popping up on screens, over the next few months, where there are directors who do not fill out returns.  Not me, thankfully.



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