Non-resident of UK company director

Sef

My client is the director of his U.K. private trading company and is the controlling shareholder of the company. He lives in Italy. Does he need to fill self assessment for the salary and dividend received from the company? Any advice on this will be greatly appreciated.

Thanks,

Dean

Yes.

Monsoon

Dean wrote: »

Yes.

Why?

I'd have said no, if he's non-UK resident.

There is no obligation for a company director to do a tax return just because he's a director, unless he owes UK tax not deducted at source.

Dean

Monsoon wrote: »

Why?

I'd have said no, if he's non-UK resident.

There is no obligation for a company director to do a tax return just because he's a director, unless he owes UK tax not deducted at source.

It is because he is a UK director. http://www.hmrc.gov.uk/SA/need-tax-return.htm#1

If you also look at the SA1 form it requests the date you become a director too.

It's to do with directors' doing as they please with regard to remuneration packages.

Regards

Dean

JodieR

http://www.hmrc.gov.uk/cnr/hmrc6.pdf Read point 2.2 of this - if he's a director of a UK company then he'll probably be classed as UK resident despite living in Italy.

Monsoon

Dean wrote: »

It is because he is a UK director. http://www.hmrc.gov.uk/SA/need-tax-return.htm#1

If you also look at the SA1 form it requests the date you become a director too.

It's to do with directors' doing as they please with regard to remuneration packages.

Regards

Dean

Ah. I have to disagree; on this point HMRC are categorically wrong. The HMRC website cannot be relied upon for accuracy.

See here, discussed recently:
http://forums.aat.org.uk/showthread.php?32664-Directors-self-assessment

Monsoon wrote: »

TMA 1970 s 7 and 8.

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.

Monsoon

JodieR wrote: »

http://www.hmrc.gov.uk/cnr/hmrc6.pdf Read point 2.2 of this - if he's a director of a UK company then he'll probably be classed as UK resident despite living in Italy.

If all his duties are abroad, I'd be surprised if just being a director of a UK Ltd makes him resident. If he has UK duties that might change things.

I have a UK Ltd with 2 directors in the USA. No UK duties. HMRC confirmed that they are not chargeable to UK tax and are non resident. I don't know if being in a EU country changes things or not.

Sef

Thank you all for your help on this.

deanshepherd

I would say yes and no.

Yes, if he has been issued with a tax return to complete or if his UK source income would result in additional tax to pay.

No, if no UK tax will arise or if no tax return has yet been issued.