Must company directors register with HMRC self assessment

gropinginthedark

My son has only found this out after some years as a director of a small speculative start-up company. He receives no financial benefit apart from a few hundred quid a year for mileage expenses. The plan is that the business will take off and generate some value to him - but not yet...
The guidance seems to be "if you are a company director then you must register for SA". Does that apply regardless of whether there's any financial benefit? If he were to register for SA would he then attract a penalty for not having done so before?

He's got a "day job" so is registered for PAYE (though falling below the tax threshold).

Pennywise

HMRC are wrong. There is no "legal" requirement for someone to register for SA just because they are a director despite what HMRC's website says. But, of course, they'd still have to register for any other relevant reason such as untaxed income or h/r tax. Having said that, HMRC can ask anyone to complete a tax return. So, he doesn't have to voluntarily register and complete SA returns, but if HMRC specifically write and tell him to, then he has to.

[Deleted User]

gropinginthedark wrote: »

My son has only found this out after some years as a director of a small speculative start-up company. He receives no financial benefit apart from a few hundred quid a year for mileage expenses. The plan is that the business will take off and generate some value to him - but not yet...
The guidance seems to be "if you are a company director then you must register for SA". Does that apply regardless of whether there's any financial benefit? If he were to register for SA would he then attract a penalty for not having done so before?

He's got a "day job" so is registered for PAYE (though falling below the tax threshold).

I'm surprised your son has not already been asked to complete an SA.

I agree with Pennywise in that there is no obligation to register for SA simply because someone is a director, bute as I understand it, HMRC automatically request all company directors to submit an SA.

flashg67

I'm the sole director of the limited company that runs the management company on our street. I've never been asked to complete an SA although I am unpaid so whether that makes a difference I don't know.

[Deleted User]

flashg67 wrote: »

I'm the sole director of the limited company that runs the management company on our street. I've never been asked to complete an SA although I am unpaid so whether that makes a difference I don't know.

Yes, as with most generalities, there's usually an exception for the odd rarity.

So to be more accurate, HMRC will issue demands for an SA to a director of a limited company unless that limited company is a non-profit making organisation, and that as a director you receive neither pay nor benefits

Pennywise

darkfield wrote: »

bute as I understand it, HMRC automatically request all company directors to submit an SA.

No, they don't these days. I've loads of limited company clients whose directors don't do SA returns. HMRC seem to have stopped doing it automatically during the last few years.

gropinginthedark

Pennywise wrote: »

No, they don't these days. I've loads of limited company clients whose directors don't do SA returns. HMRC seem to have stopped doing it automatically during the last few years.

Going back about 20 years, I was an unpaid director of my wife's business (it used to be a requirement that there were at least 2 directors I think that's no longer the case) and I was never asked for a tax return - but perhaps that pre-dates SA? and certainly pre-dates on-line returns. I'd like to believe HMRC are moving away from hassling people/companies where income/turnover is small and focus on those where there's a realistic opportunity to collect more significant amounts of tax.
My son's small sideline business may generate a few hundred quid of tax, it's not worth going to great lengths to avoid - unlike that long list of (mainly US) businesses that somehow manage to pay less tax than my annual income tax on the billions they make in UK.

Thanks to all for some useful observations.