Director and tax return

LynWest

Can anyone please clarify for me the legal situation on whether a co-director who isn't receiving a wage from their company, just a dividend from profit has to complete a tax return?

I remember asking a HMRC person at one of their education sessions and they gave an emphatic YES!!!
However, i am sure i have read somewhere that in tax law, there is no legal requirement unless, their income is not being fully taxed at the appropriate rates. I have a couple of co directors where they don't work in the business they are employed elsewhere and just receive a dividend from any profits the company makes. Their income would be fully taxed unless dividends took them into the higher tax bracket.

A little confused. Don't want to not file and it comes back to bite me on the bum! :confused1:

acastudentmaat

A similar situation arose for me this week. My client has been an employee of a company for the past few years and so has not filed tax returns. Half way through this year they became a director. They did not receive a dividend or any other benefits apart from the employment income which was taxed at source.

We phoned HMRC to clarify and they said that if the director receives any benefit at all from the company they need to complete a tax return even if there is no tax liability.

If i was you i would file the tax returns as they have received a dividend from the company.

peaman

HMRC state that all directors must complete a tax return, excerpt from HMRC website...

Company directors, ministers, Lloyd's names or members

You must complete a return if you're any of the following:
• a company director (unless you're a director of a non-profit organisation, for example a charity, and don't receive any payments or benefits)
•a minister of religion (any faith)
•a name or member of Lloyd's