Personal Tax

Do Directors Need to Submit A Tax Return?

Do Directors need to submit a tax return? Up until January 2019 HMRC have always insisted that a personal tax return be completed by a Director. This however was not the law.

The law, do Directors need to submit a tax return?

The taxes management Act 1970 (TMA1970) contains no specific legislation for a Director to submit a tax return. A Director only needs to register for self-assessment if an additional tax liability is due.

HMRC guidance, do Directors need to submit a tax return?

The online guidance provided by HMRC stated that ‘You’ll need to send a return if, in the last tax year you were a company Director’

HMRC’s guidance was therefore insisting that all company Directors complete a tax return. Not just those with additional tax liabilities, which was the law.

What’s changed?

In January 2019, HMRC has finally changed its guidance to reflect the law.

Do Directors need to submit a tax return under the new HMRC guidance? The advice that HMRC now state is a Director is not required to file a tax return. This is, if they are taxed under PAYE and receive no additional untaxed income.

HMRC have updated their online tool, which assists with resolving who is required to file a tax return. This tool isn’t just for Directors, so if you are unsure if you need to file a tax return please use this HMRC tool.

Potential pitfalls

Now that HMRC and the law are in unison. The question do Directors need to submit a tax return should be straight forward. However, this isn’t always the case.

A Director who has been issued with a notice to complete a tax return must do so. If the notice has been issued incorrectly, then the Director can ask HMRC to have the notice withdrawn. HMRC may still decline this request and insist that a tax return is completed.

Do Directors need to submit a tax return conclusion

There are 3 possible scenarios:

  • Directors who have been issued with a notice to complete a tax return must do so, or request from HMRC that the notice is removed.
  • When a Director, does have additional untaxed income, such as Dividends, they must register themselves for self assessment and file a tax return.
  • Directors who only receive income under PAYE only and receive no additional untaxed income, are no longer required to register for self assessment.

The penalties and fines for getting it wrong can be significant. It is therefore important to seek professional tax advice if you are unsure of your obligations. Please contact ourselves on 07961 048484 or email us at [email protected]

DISCLAIMER – Please note that the content contained in this article is for general information only and is not a substitute for professional advice – read our full disclaimer