Scandalously stupid, naive question

dixie_dean_2

As a director of a limited company, do I have to file a self-assesssment form with hmrc as well as a company tax return. At present i'm not taking any money out of the business, if that makes any difference.

BoGoF

Yes you do

dixie_dean_2

Thanks. And that has to be done by 31st January for online, irrespective of the company tax year?

edit, sorry, unless you get a letter after 31st october.

BoGoF

That is correct, assuming the directorship started before 6 April 2011?

dixie_dean_2

Yeah, it started in september 2010. I haven't had a letter from them regarding it though.

chrismac1

In fact there has been a vigorous debate about this on two different other websites I frequent. The conclusion on both sites - UK Business Forums finance section, and Accountingweb, is as follows:

1. Both the HMRC and Business Link websites state that all directors must file SA returns.
2. No-one can find any piece of legislation in either the Companies Act or Taxes Acts which states this.
3. Hence, until such time as someone points out such legislation in an Act and not an unreliable website such as the HMRC one, myself and doubtless many other accountants are advising director clients that unless HMRC has sent them a letter requring them to file a return, unless they have a separate reason to file such as a source of rental income they are under no such obligation.

dixie_dean_2

Ok, might have a chat with HMRC. I had a look at the forum you mentioned and seems as clear as muddy, foggy, sewer water. Obviously dont want to run the risk of getting a fine, especially as I presume filling in a form with very little info won't be too difficult.

Cheers,
Bob

ceeforcat

chrismac1 wrote: »

In fact there has been a vigorous debate about this on two different other websites I frequent. The conclusion on both sites - UK Business Forums finance section, and Accountingweb, is as follows:

1. Both the HMRC and Business Link websites state that all directors must file SA returns.
2. No-one can find any piece of legislation in either the Companies Act or Taxes Acts which states this.
3. Hence, until such time as someone points out such legislation in an Act and not an unreliable website such as the HMRC one, myself and doubtless many other accountants are advising director clients that unless HMRC has sent them a letter requring them to file a return, unless they have a separate reason to file such as a source of rental income they are under no such obligation.

I remember a few years back that there was some kind of directive for those who had multiple directorships - some of which may have been honorary - from which no remuneration was received. It definitely stated that there was no requirement to complete employment pages for each. Does this ring any bells?

jimmo

The law is relatively straightforward on this.
If HMRC issue a Return or Notice to File you are required to make your Return within the statutory time limit.
S8 TMA 1970
http://www.legislation.gov.uk/ukpga/1970/9/section/8/enacted
If HMRC have not issued a Return or Notice to File you are under no obligation to complete a Return.
End of, except, if you have a tax liability which is not being dealt with by other means such as PAYE, you must notify HMRC of your liability.
S7 TMA 1970
http://www.legislation.gov.uk/ukpga/1970/9/section/7/enacted
Unfortunately, those links are to the legislation as it was enacted in 1970 and the current, amended versions don’t seem to be available. However whilst the details have changed, the principles haven’t.
So chrismac 1 is quite right. HMRC say that if you are a company director you must make an annual Return but there seems to be no justification for that in law.
In practice however HMRC should get to learn that you are a company director by other means e.g. when the company, itself notifies HMRC of its own liability.
Once HMRC know you are a company director they can follow their own policy and issue Returns or Notices to file and then you will be obliged to comply.
So, as long as neither you nor your company are evading tax, if you have not been required to submit a Return you are doing nothing wrong and there can be no penalties.
Then it’s a question of attitude. Are you comfortable knowing you are in the right and can defend yourself if it comes to a fight with HMRC? In which case you won’t bother phoning HMRC and let sleeping dogs lie.
Would you be more comfortable complying with what appears to be HMRC policy rather than the letter of the law? If you phone HMRC and tell them you are a director it is almost certain that they will put you into Self Assessment and start issuing annual Returns. They may be a bit of a chore but you may feel more comfortable doing annual Returns rather than constantly looking over your shoulder in case the taxman is creeping behind you.

BoGoF

One other point worth mentioning, if you take dividends instead of salary which push you into the higher rate tax bracket then you would of course be obliged to notify HMRC of your chargeability to tax.

dixie_dean_2

Interesting stuff. To a layman it seems crazy that something this simplke isn't clear cut and remarkable that people in the know consider the hmrc site as "unreliable". I'll probably just file one as there is, of course, the off chance that their request was lost by another one of our reliable institutions, Royal Mail.