I know this was debated recently, but can anyone comment on the validity of this statement made by HMRC, and let me have the relevent references?
Many thanks in advance
"Under Self Assessment criteria a Self Assessment record is required as you were a company director during the 2010-11 tax year"
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Yes and no
There is no automatic requirement for a company director to file under SA. It would be difficult to enshrine this in law since there is no statutory definition of just who is a director.
There is the more general point though that once HMRC has requested a return then you must comply.
Thanks Neileg ...
... yes, if a notice to file issued it must be submitted, but that is not what they said. What you say is what I felt, had they said "as a notice to file a return was issued on ..." fair enough, but I believe they have made an untrue statement!
I'd challenge it
Hi OGA (and all the best for 2013)
Their website clearly states that company directors are required to file a return but I've yet to see the statute that repeats this. I looked at their manuals and in SALF100 it states that SA "also affects individuals who do not receive a tax return, but need to claim a tax relief or allowance".
I've had a director client who has not needed to calim a relief or allowance and so who had never completed a return. As the basic penalty is no longer extinguished by £0 tax, I submitted a blank return for 2012 stating that the only reason for doing it was the statement on HMRC's website. We are now waiting to see whether they query why a return was not submitted for previous years. If they do require them I'll ask them to quote the statute.
Alternatively someone on here might be able to point us to the mid 90s legislation?
TMA 1970
s.8 TMA 1970 is the section which says that a person may be required by a notice from HMRC to submit a personal tax return and s.7 is the section which says that every person who is chargeable to income tax or capital gains tax and who has not received a notice from HMRC must notify his chargeability to tax within 6 months of the end of the tax year.
There is no mention of directors in either section and hence, there is no legal basis for any assertion by HMRC that every director must file a tax return. However, they have every right to set their own criteria for issuing notices to file tax returns and they generally choose to issue tax returns to directors, but if they don't, there is no legal requirement to submit a nil return and no penalty can be applied legally for any "failure" to do so.
Was the Co trading?
We have spoken to HMRC to ask the same question and they have always asked if the Co was trading. If not, they always said no requirement.
HMRC is quick to take people out of the SA system
I have had many director clients taken out of the system of SA by HMRC when other things have ceased e.g. lettings or self employment. The client receives a letter from HMRC and is jubilant that they are no longer in the system but I tend to spoil that.
My policy is to point out (by letter) that ...............unless HMRC has changed its policy, the client should be in the system. Quickly, the standard letter comes back saying .......... we have looked at your tax records .........and tghey go back in !
I still have several who are outside the system despite advising HMRC accordingly.
Chargeability - from the chargers mouth
'Exceptions to the requirement to notify chargeability
Section 7(3) to (7)
There are exceptions to this requirement. These are where the taxpayer has no chargeable gains (or such gains as there are do not exceed the annual exempt amount), and either:
has no net liability to income tax for the year, or
has had sufficient tax deducted at source to meet the net income tax liability for the year.