The official guidance for Directors is…
As a director of a limited company, you must:
- follow the company’s rules, shown in its articles of association
- keep company records and report changes
- file your accounts and your Company Tax Return
- tell other shareholders if you might personally benefit from a transaction the company makes
- pay Corporation Tax
- register for Self Assessment and send a personal Self Assessment tax return every year
You don’t need to register for Self Assessment or send a tax return if your company is a non-profit organisation (for example, a charity) and you didn’t get any pay or benefits, like a company car.
So, basically, if you are a director you must register!
Many accountants think that this one size fits all approach is a little over the top and returns for salaried directors are unnecessary in some cases but the rules are absolutely clear, Directors must register!
So the latest case involving a property company came as a surprise to many accountants
Mohammed Salem Kadhem (case TC05929) became a director of a property company on 21 May 2014. He received no pay or dividends from that company and didn’t register for self-assessment.
It was reported in full at http://www.accountingweb.co.uk/tax/hmrc-policy/tribunal-company-directors-dont-have-to-submit-tax-returns?utm_medium=email&utm_campaign=AWUKPOW210617&utm_content=AWUKPOW210617+CID_b1f3f98189c6021fa5eaf5a489ca5e3d&utm_source=internal_cm&utm_term=Company%20directors%20dont%20have%20to%20submit%20tax%20returns
Basically HMRC made mistakes in their approach to the case basically arguing that a notice to file had been sent but were unable to prove the notice was sent and Mohammed Salem Kadhem won.
The tribunal accepted that he had a reasonable excuse for filing a late return and all the penalties were quashed.
This doesn’t change the fact that all directors must register and a file self assessment returns. Don’t risk it, its better to file returns!