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Directors self assessment

PGMPGM Font Of All KnowledgeRegistered Posts: 1,954
Should all directors be registered for self assessment?

My colleague isn't, and HMRC says he should be. I am, but for unrelated reasons.

Comments

  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    Not necessarily.

    This comes up regularly on another forum so I'm going to cut and paste a response:
    A company director does not automatically have to complete a self assessment tax return. If you receive untaxed income or are liable to higher rate tax that is not deducted at source then you would need to notify HMRC.

    You may find that once you notify HMRC that the limited company is trading they issue you a notice to complete a SA tax return (for yourself) and if this happens then you will need to complete and file that return.

    There is nothing in law that says every company director has to complete one; the normal rules of needing to notify apply.

    Translation: when HMRC say every director has to do one, they are wrong.
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    Thanks Monsoon,

    Do you have any HMRC links?

    Its really kicking up a fuss here now, 4 of us have spoke to the HMRC and all been told they need to register.
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    Just spoke to the CIS dept again, and they said its not a legal requirement for directors to be registered for self assessment! (thanks Monsoon for the help there)

    Can't believe they've said this after the amount of times they've told us we need to be, argh!
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    Moral of this story: don't ask HMRC, ask a tax advisor ;)
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    Monsoon wrote: »
    Moral of this story: don't ask HMRC, ask a tax advisor ;)

    This needs to be taught to every accountancy student!
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    PGM wrote: »
    This needs to be taught to every accountancy student!

    And every member of the public!

    On a more serious note, it just goes to show that HMRC do get things wrong, even general advice. There was another thread here the other day that said words to the effect of "in awe of HMRC and expected their software to be perfect."

    It is reasonable that someone would read something on the HMRC wesbite and believe it to be true. Sadly, someone needs to teach people that HMRC cannot be relied on :(
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    Our auditors did point out there training is a little lacking. I suppose it is hard to turn a call centre into tax experts! If only I'd heeded their advice a little sooner and saved myself some hassle. But it's all a learning exercise...
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    Just got another letter from the HMRC..

    It states again that the directors need to be registered for self assessment.

    There's a copy of Sa1 attached, for registering for self assessment, and one of the reasons you may need to register is "becoming a director"

    I'm confused :(
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    Thanks Monsoon, I'm stuck between a rock and the HMRC...

    They're holding up our application for gross payment because of this.

    I'll try again quoting the relevant legislation.

    Many thanks :)
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    Does anyone have a link for the best TMA to use?

    I've found an original one and then a Jan08, which seems similar but updated.
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    If there is an updated one, use that one.

    http://www.generalcommissioners.gov.uk/Documents/RulesLegislation/TMA1970ConsolidatedJan08.pdf

    Page 13. If you look at the bottom of section 7, you will see footnotes that say what got updated when.

    What the law says
    7(1) Every person who–
    (a) is chargeable to income tax or capital gains tax for any year of assessment, and
    (b) has not received a notice under section 8 of this Act requiring a return for that year of his
    total income and chargeable gains,
    shall, subject to subsection (3) below, within six months from the end of that year, give notice to an
    officer of the Board that he is so chargeable

    Translation: if someone owes tax then they have to register for SA, unless they fall within the exemption below:

    7(3) A person shall not be required to give notice under subsection (1) above in respect of a year
    of assessment if for that year his total income consists of income from sources falling within
    subsections (4) to (7) below and he has no chargeable gains.

    A director earning salary and dividends who is not a higher rate taxpayer does fall under the exemptions at 7(4) and 7(6) (PAYE and Dividends, respectively).

    Translation: If HMRC have not told a director to do a self assessment return (by virtue of section 8) and if the director doesn't owe any tax (by virtue of the 7(4) and 7(6) exemptions) then he doesn't have to do one.

    Go get 'em!
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    Thats great help Monsoon, much appeciated!

    I shall be writing to them soon!

    thanks
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    PGM wrote: »
    Thats great help Monsoon, much appeciated!

    I shall be writing to them soon!

    thanks
    No worries. The sad thing is, I enjoy stuff like this, haha. Good luck and please do let us know how you get on.
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