Director's Tax Return

LondinaLondina Experienced MentorMAAT, AAT Licensed Accountant Posts: 814
I didn't know there is a tax return for directors of limited companies!! SA 100 and SA103 (if I'm correct), totally a surprise!

In BTC Unit 18 this was never covered, how do I supposed to know? I thought companies have the CT600 to deal and that's it..

:-/
«1

Comments

  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,069
    Londina wrote: »
    I didn't know there is a tax return for directors of limited companies!! SA 100 and SA103 (if I'm correct), totally a surprise!

    In BTC Unit 18 this was never covered, how do I supposed to know? I thought companies have the CT600 to deal and that's it..

    :-/

    You learn by experience ;)

    All directors are required to complete a tax return. However, if a notice to complete a return isn't sent by HMRC to a director, there is no obligation to obtain a UTR and file one. So you only need to do one if the director is asked to.

    You need to complete the main return, and the employment pages only if they actually receive a salary or benefits (if they don't, then you don't need to complete the employment pages). Obviously you need to complete any other supplementary pages if they are applicable to the individual's circumstances.

    If there are any benefits, the company will have to complete a P11D for each employee or officer to whom benefits were provided, and if there is any salary past the first NI threshold then a P35 and P14s need completing.

    It's more than the CT600!
  • LondinaLondina Experienced Mentor MAAT, AAT Licensed Accountant Posts: 814
    Monsoon wrote: »
    You learn by experience ;)
    All directors are required to complete a tax return..
    It's more than the CT600!

    I think we should cover this information in our taxation's module! I really didn't have a clue, how do a MIP that starts his first business (and never worked in practice) supposed to know this?
    What else we don't know?

    For these reasons sometime I think it's difficult to set up our own business, because the knowledge provided by the AAT is not as wide as the chartered ones...
  • deanshepherddeanshepherd Font Of All Knowledge Registered Posts: 1,809
    Londina wrote: »
    how do a MIP that starts his first business (and never worked in practice) supposed to know this?

    To (mis)quote Gordon Ramsey:

    "Why the f*** did you decide to open an Italian restaurant when you've never worked in one. Are you f***ing mad?!"
  • andrewtdkandrewtdk Well-Known Registered Posts: 150
    I think the reason for not covering everything at AAT is that there simply isnt time. This is why the practise experience is so important because it provides so much knowledge that the AAT cannot provide in 1 day a week over just 2 years.

    I dont know how to work the quotes on here but in response about how can a MIP who has never worked in practise know this i dont think this can ever apply because it is surely impossible to get a practising certificate in areas which you dont have the relevant work experience?

    I dont think id even want a chartered accountant doing my accounts if they had no practice experience.
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,069
    To my knowledge, the AAT only grant someone a MIP licence if they can show relevant competence and experience in each area applied for on the licence. They are not allowed to practice in areas for which they are not licenced (read: areas in which they don't "have a clue"). Student members can practice without a licence as long as they only do work in which they are competent, and don't mention the AAT. So nobody should be doing work they don't know about!

    Qualifications mean little without experience to teach people how to use them.
    You don't know what you don't know - so you don't always know what to ask about.

    When I got my MIP licence I did have some experience - but I still didn't feel it was enough, I still felt out of my depth. I dread to think how some people start their own practices with no experience and it's just not fair on the clients (unless they are fully aware they are using an ASP with no experience).

    There seem to be a lot of MIPs on the forum with no experience or who don't seem to know the basics, but who have been granted licences and it's a bit worrying.

    Londina this isn't directed at you so much, just general commentary.
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    To (mis)quote Gordon Ramsey:

    "Why the f*** did you decide to open an Italian restaurant when you've never worked in one. Are you f***ing mad?!"

    I think you're right, if you've never worked for a company that does tax, you need to steer clear.

    Even the highly qualified auditors that audit us won't advise on tax without refering it to their tax department.
  • LondinaLondina Experienced Mentor MAAT, AAT Licensed Accountant Posts: 814
    Monsoon wrote: »
    Londina this isn't directed at you so much, just general commentary.

    I know..I'm not a MIP, but working in a practice, I like to post my experiences in this forum so it could be useful to new MIPs if they come across to a similar problem :-)
    Monsoon wrote: »
    When I got my MIP licence I did have some experience - but I still didn't feel it was enough, I still felt out of my depth. I dread to think how some people start their own practices with no experience and it's just not fair on the clients (unless they are fully aware they are using an ASP with no experience).

    There seem to be a lot of MIPs on the forum with no experience or who don't seem to know the basics, but who have been granted licences and it's a bit worrying.

    I'm wondering the same! for example in another practise I had experience of final accounts and complete CT600, so I could apply to the AAT and have this licence, however I didn't know that a director have to submit a tax return too!! Good job I found that out, but what about if I started my own business without knowing this? A client could get back to me very furious and I would look incompetent!!

    That's why I don't think it's a good idea for people that always worked in industry to start their own practices, as they don't know the amount of unknown stuff that you can get.

    I would definately never offer taxation services, I don't even like it.
  • deanshepherddeanshepherd Font Of All Knowledge Registered Posts: 1,809
    Londina wrote: »
    however I didn't know that a director have to submit a tax return too!!

    They don't.
  • LondinaLondina Experienced Mentor MAAT, AAT Licensed Accountant Posts: 814
    They don't.

    yes they do! it's a form that I have never seen, a certain SA100 www.hmrc.gov.uk/forms/sa100.pdf

    In our BTC studies however there was no mention about it, that's why this thing really annoys me, as if I was doing my own practice, I wouldn't know!

    At work for every company, we also file that tax return for the directors
  • beverly hudsonbeverly hudson Feels At Home Registered Posts: 95
    Yes, all directors of UK companies must submit a tax return by law!
  • BluewednesdayBluewednesday Font Of All Knowledge Registered Posts: 1,624
    As far as I was aware (and there is a good post on accountingweb backing this up) it is not a legal requirement for a director to file a tax return but an HMRC preference.

    Therefore if HMRC fail to issue a requirement to file notice then the director is not obliged to file a return unless he breaches the other requirements. Obviously once they do then one must be filed.

    In practice it is more than likely that a notice to file is recieved by a director but we have had directors who have not recieved them and not filed returns.
  • deanshepherddeanshepherd Font Of All Knowledge Registered Posts: 1,809
    Yes, all directors of UK companies must submit a tax return by law!

    Care to provide a reference to the law you are referring to Beverly?

    My wife is a director of my company and does not complete a Tax return. Call the cops.
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,069
    Londina it's not a different form, its the same form - main form plus any supplementary pages their personal circumstances require. The form you linked SA100 is the main tax return that everyone who gets a return has to complete
    As far as I was aware (and there is a good post on accountingweb backing this up) it is not a legal requirement for a director to file a tax return but an HMRC preference.

    Therefore if HMRC fail to issue a requirement to file notice then the director is not obliged to file a return unless he breaches the other requirements. Obviously once they do then one must be filed.

    In practice it is more than likely that a notice to file is recieved by a director but we have had directors who have not recieved them and not filed returns.

    Absolutely.

    It's certainly not "the law". If a director is issued one, they must file one, but if they aren't, and there are no other reasons meaning they need to complete a tax return, they don't have to do one, nor request one from HMRC. This is contrary to situations like a capital gain, where a taxpayer has to notify HMRC that they have circumstances that require a tax return.

    In our practice we probably have 60% of directors who do complete a tax return (likely those who incorporated from sole traders and therefore were in self assessment already) and 40% who do not.
  • LondinaLondina Experienced Mentor MAAT, AAT Licensed Accountant Posts: 814
    Monsoon wrote: »
    Londina it's not a different form, its the same form - main form plus any supplementary pages their personal circumstances require. The form you linked SA100 is the main tax return that everyone who gets a return has to complete

    no, it not the same one!

    For companies is CT 600: http://www.hmrc.gov.uk/ctsa/ct600-2008.pdf
    For individuals is SA103: http://www.hmrc.gov.uk/forms/sa103f.pdf

    These are the only forms covered in BTC Unit 18 and we based our exams on, I have never see the other one!
  • BluewednesdayBluewednesday Font Of All Knowledge Registered Posts: 1,624
    The SA103 is just a supplementary page to the SA100
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,069
    Thanks BW.

    Londina, anyone who has to complete a personal self assessment has to complete SA100.
    They then have to complete any supplementary pages that apply to them, such as the SA103 for self employed people. Other supplementary pages include employment, land and property (for rental income) etc.

    So a self employed person can't only complete SA103, they have to complete SA100 and SA103.
  • deanshepherddeanshepherd Font Of All Knowledge Registered Posts: 1,809
    Londina wrote: »
    These are the only forms covered in BTC Unit 18 and we based our exams on, I have never see the other one!

    It is a long time since I studied AAT but presumably BTC is 'Business Tax'?

    I think you will find the tax return (SA100) abundantly mentioned in the personal tax unit. 'PTC' perhaps?
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,069
    It is a long time since I studied AAT but presumably BTC is 'Business Tax'?

    I think you will find the tax return (SA100) abundantly mentioned in the personal tax unit. 'PTC' perhaps?
    Yes thats right on the module names.

    I honestly can't remember (I did it in 05-06), but I'm pretty sure the SA100 would have been covered on PTC.
  • LondinaLondina Experienced Mentor MAAT, AAT Licensed Accountant Posts: 814
    Monsoon wrote: »
    So a self employed person can't only complete SA103, they have to complete SA100 and SA103.

    Another surprise, I thought based on our studies that a self employed have only to complete SA103
    It is a long time since I studied AAT but presumably BTC is 'Business Tax'?
    I think you will find the tax return (SA100) abundantly mentioned in the personal tax unit. 'PTC' perhaps?

    I didn't do PTC (PERSONAL TAX)
  • deanshepherddeanshepherd Font Of All Knowledge Registered Posts: 1,809
    Then why do you think you should have been taught anything about personal tax returns in your studies?
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,069
    This thread is a perfect example that illustrates how study can only teach a person so much, and you experience is essential to fill in all the gaps.
  • LondinaLondina Experienced Mentor MAAT, AAT Licensed Accountant Posts: 814
    I am not interested into personal taxation, that’s why I choose only business taxation.

    However in business taxation unit the soletrader and his SA103 is covered and apparently personal taxation unit covers a tax return of a director of a COMPANY? Should not be the other way round!?! Why split things like this in separate units?

    There are people moaning about licences given to “incompetent” MIPs, but we are what the AAT teaches us...
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,069
    Londina wrote: »
    1. I am not interested into personal taxation, that’s why I choose only business taxation.

    2. However in business taxation unit the soletrader and his SA103 is covered and apparently personal taxation unit covers a tax return of a director of a COMPANY? Should not be the other way round!?! Why split things like this in separate units?

    3.There are people moaning about licences given to “incompetent” MIPs, but we are what the AAT teaches us...

    1. Business taxation for as sole trader includes personal tax, because a sole trader is a person, they aren't a separate entity like a Ltd Co. So while you may not want to get into the nuances of higher rate tax payers, their benefits, pensions etc, you have to have a basic grounding in personal tax in order to do business tax for individuals. And for Ltd Co owners (sharehodlers) and managers (directors). Sorry!

    2. A director is a person, not a business. It's personal income. It's separate to the company, they are separate people. It's not business income (odd as that sounds). The company has business income and that's declared on the CT600. Salary (paid to directors) is employment income and dividends (paid to shareholders, not directors) are investment income. Directors and shareholders don't have 'business' income. So again, you need to know about personal tax to do business tax! The two are inextricably linked.

    To be fair, the AAT (or rather, the course providers) should make this obvious to students.

    3. You are not what the AAT teaches you. You know what the AAT teaches you, but you don't know what you don't know. We keep saying experience is ESSENTIAL to fill the gaps that study just can't cover- and it can't cover everything. AAT doesn't teach you to run a business, or to deal with the nuances and oddities that crop up in practice, it just teaches you the basic skills. AAT demands you have experience before you get your MIP licence. There is a darn good reason for that!

    < GENERAL RANT >
    People seem to think they can do a course and then walk straight into running their own business. The bookkeeping bodies are particularly bad for selling their courses this way. One of our bookkeepers was sucked in like that: "Study with us then go on and earn £20 an hour working for yourself!" It just doesn't work like that in the real world, not in this industry! She qualified, then realised she wasn't equipped to walk into the real world and work for herself, because a bag of receipts is totally different to the way incomplete records is taught, and an ETB in real life is nothing like as simple as the way it's presented in the exam, because you have to hunt down the problems and explanations, whereas in exams the explanations are given and all you have to do is work out the journals and post them. She realised she needed experience and so now she has a job with us (and she is brilliant). What's scary is that some people don't do what she did, are overconfident and set up on their own, without knowing how to relate their classroom skills to real life, and then businesses like ours have to pick up the pieces when the client gets into an unholy mess because of an inexperienced ASP.

    I know it's hard to get experience, but there really isn't any choice for those who want to do a good job.
    </RANT>
    *deep breath*
  • andrewtdkandrewtdk Well-Known Registered Posts: 150
    I dont think we should be what the AAT teach us i think we should be much more than that and i think its the reason why people need to have experience to become MAAT or even MIP. I dont think anyone would take a couple of flying lessons and then think that they are capable of flying a 747 and i dont see how people can think passing a relatively simple accountancy qualification can enable them to be a fully competant accountant.

    I dont necesseraly feel that BTC needs to cover tax returns, i can see what you mean when you say its the tax return for the director however this is just where his income comes from, his tax affairs are totally personal and dont necesseraly have anything to do with the company

    Edit: Just noticed that monsoon has posted a much more detailed and better worded reply while i was typing this but ill leave the post up anyway
  • LondinaLondina Experienced Mentor MAAT, AAT Licensed Accountant Posts: 814
    Monsoon wrote: »
    So again, you need to know about personal tax to do business tax! The two are inextricably linked.

    To be fair, the AAT (or rather, the course providers) should make this obvious to students.

    Damn, if I knew all this before, I would have done PTC! That's my point, at least AAT or providers should made these distinctions clearer!

    I agree with your rant, experience is essential, I'm considering myself lucky that I'm an employee in a practice and am learning all this whilst I get paid, if I had to discover it in my own business, I would make a loss and close down very soon!
  • AndypandyAndypandy Experienced Mentor Registered Posts: 526
    This has to be of the most constructive threads on the forums ever - lots of thanks, especially to Londina & Monsoon.
    Andrea x
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,069
    Thanks Andrea, glad you think so :)
    Londina wrote: »
    Damn, if I knew all this before, I would have done PTC! That's my point, at least AAT or providers should made these distinctions clearer!

    I agree with your rant, experience is essential, I'm considering myself lucky that I'm an employee in a practice and am learning all this whilst I get paid, if I had to discover it in my own business, I would make a loss and close down very soon!
    Londina yeah, you're so lucky to be getting the experience you are, working in practice while you're studying is such a help.

    I do think its a bit off that its not made clearer what each tax module entails and how they relate to working in practice because this is a vocational qualification and so knowing what's best going to help your career is kinda useful!!!

    I guess nothing is perfect, AAT is a great qualification. I suppose tutors get caught up in their jobs and forget that some non-compulsory information is still incredibly useful.

    Might be worth popping a mail into the AAT student team and ask them to include some additional info next time they update their course material.
  • jay zjay z Just Joined Registered Posts: 4
    Ptc & btc

    All in one!! great exchange. Just late to add any additions. Monsoon r u your own boss? or partner in practice?

    {Peace}
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,069
    jay z wrote: »
    All in one!! great exchange. Just late to add any additions. Monsoon r u your own boss? or partner in practice?

    {Peace}

    I co-own and manage a 2 partner firm with 3 employees. So, both!

    n pls dnt tlk in txt spk on here. thx ;)
  • LondinaLondina Experienced Mentor MAAT, AAT Licensed Accountant Posts: 814
    Andypandy wrote: »
    This has to be of the most constructive threads on the forums ever - lots of thanks, especially to Londina & Monsoon.
    Andrea x
    jay z wrote: »
    All in one!! great exchange.
    {Peace}


    You are welcome! Glad my post has been useful to all of you! :-)
Sign In or Register to comment.