Blogs/Vlogs

The start of the end for directors’ tax returns?

28 June 2017

Directors’ responsibilities per HMRC guidance state that, except for non-profit organisations, ‘As a director of a limited company, you must…register for Self Assessment and send a personal Self Assessment tax return every year’.

A case (Kadhem v HMRC), looking at whether a company director has an obligation to file returns even if no notice to file was received, has recently gone through the tax tribunal and the results are interesting. It was concluded that there is no legislation that specifically states that a Self Assessment tax return needs to be submitted just because an individual is a company director. Therefore, the HMRC guidance above does not have the force of law and ‘does not accurately reflect what the law says.’

Please note that the case did go on to say that if a notice to file is received, then that individual has an obligation to file a tax return for the period in question. This is, therefore, unlikely to affect many directors who are already in Self Assessment. However, when registering new companies and directors it may be worth considering if a director needs to be registered for Self Assessment.

As a reminder: a director, or any individual, must register for Self Assessment if they have a source of untaxed income. Further guidance on this can be found on the gov.uk website here, although this should be treated with caution and if you are unsure you should contact your usual UHY adviser. For example, directors who are in receipt of dividends are likely to need to register for Self Assessment, regardless of the amount received.

The future of tax returns is currently uncertain given the Making Tax Digital provisions and the above result is likely to be transitional until the new rules are brought into legislation. For the latest on Making Tax Digital, please visit our MTD blog.

If you would like further information on the above post or you would like to discuss your own specific circumstances, please get in touch with your usual UHY adviser or contact me, Laura Blundell.

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