Ltd Company Director Self Assessment

Tim123 · Dec 16, 2010

Hi I am forming a company in May 2011 and will be the only director. My question is do i need to fill out a self assessment tax return. If so will i be sent one automatically or do i need/have to register. As i will be a director in May 2011 and have never been a director before what year will the tax return be (2010/11 or 2011/12). I will be paying myself a small salary through PAYE.

Thanks for you help.

Tim

MyAccountantOnline · Dec 16, 2010

Hi Tim

If you receive one you must complete it.

If you don't get one you need to request one if you will have any tax to pay which isn't collected via PAYE/deducted at source.

elaine@cheapaccounting · Dec 16, 2010

I would suggest that you get your limited company accountant to take care of all of this.

Have a read of this for when you start you company in May ...

The Essential FREE GUIDE to running a limited company

http://www.cheapaccounting.co.uk/mailsltdcoguide.pdf

yackers1 · Dec 16, 2010

All directors are required to prepare a self assessment tax return. If you don't receive one then apply for it - failure to file one on time will result in an automatically penalty of £100 regardless of whether there is any additional tax to pay or not. Your first self assessment tax return will be for the 2011/12 tax year - i.e. the year ended 5 April 2012, due to be filed by the 31 January 2013.

elaine@cheapaccounting · Dec 16, 2010

yackers1 said:
All directors are required to prepare a self assessment tax return.

has this changed recently? and I missed it. We have this debate every year don't we ...

David where are you?

yackers1 · Dec 16, 2010

ElaineC - You need to get up to date and check the facts before you rubbish someone's answer so quickly!

Check out the HMRC website ( Iwould post the link but I have not made enough replies to be allowed to!). If you search for who needs to complete a tax return you will see on the page; that "Directors must complete a tax return unless it is a director of a not for profit organisation and don't receive any payments or benefits"

So, based on this Tim123 DOES need to complete a self assessment tax return.

MyAccountantOnline · Dec 16, 2010

I will gladly stand corrected if someone would like to refer me to the relevant legislation stating that all company directors are required by law to complete a tax return.

elaine@cheapaccounting · Dec 16, 2010

yackers1 said:
ElaineC - You need to get up to date and check the facts before you rubbish someone's answer so quickly!

Check out the HMRC website ( Iwould post the link but I have not made enough replies to be allowed to!). If you search for who needs to complete a tax return you will see on the page; that "Directors must complete a tax return unless it is a director of a not for profit organisation and don't receive any payments or benefits"

So, based on this Tim123 DOES need to complete a self assessment tax return.

I have asked David G to gives me the link to the actual legislation on this - am looking for it now myself.

Bear with me ...

MyAccountantOnline · Dec 16, 2010

Just to add it is my understanding that by virtue of TMA 1970 the obligation to file a Return arises because of the issue of a notice under TMA 1970 s8(1), in its absence the obligation is to notify chargeability.

Many directors will have no additional tax liability and hence no requirement to notify chargeability ie request a tax return for completion.

elaine@cheapaccounting · Dec 16, 2010

Here we go ...

Notice of liability to income tax and capital gains tax
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.
7(2) In the case of persons who are chargeable as mentioned in subsection (1) above as the
relevant trustees of a settlement, that subsection shall have effect as if the reference to a notice
under section 8 of this Act were a reference to a notice under section 8A of this Act.
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.
7(4) A source of income falls within this subsection in relation to a year of assessment if-
(a) all payments of, or on account of, income from it during that year, and
(b) all income from it for that year which does not consist of payments,
have or has been taken into account in the making of deductions or repayments of tax under PAYE
regulations.

http://www.generalcommissioners.gov.uk/Documents/RulesLegislation/TMA1970ConsolidatedJan08.pdf

MyAccountantOnline · Dec 16, 2010

Thank you very much Elaine for taking the time to post that I think thats fairly clear for all.

elaine@cheapaccounting · Dec 16, 2010

yackers1 said:
ElaineC - You need to get up to date and check the facts before you rubbish someone's answer so quickly!

Can you check this legislation and see if you agree with it please - thanks

elaine@cheapaccounting · Dec 16, 2010

Nicola J said:
Thank you very much Elaine for taking the time to post that I think thats fairly clear for all.

well for the lay person I admit it is hard stuff to read and understand but I think yackers is an accountant.

I haven't looked at that for ages

elaine@cheapaccounting · Dec 16, 2010

I see that you are saying that we are not reputable.

I do so hope that you can back this up !!

MyAccountantOnline · Dec 16, 2010

Interimsolutions said:
All directors are automatically sent a self assessment return form, and if it is not completed you have to pay a 100 pound penalty!

Your statement is not correct - our tax system would be flooded with tax returns if all directors were automatically sent tax returns for completion.

Sadly on a forum such as this inaccurate and incorrect information is often posted.

If I am being classed as a cheap bean counter allow me to respond.

I personally am a Chartered Certified Accountant (FCCA) as well as being AAT and ATT qualified. I have been in practice for over 20 years. I have worked for some very well respected accountancy practices as well as running two former high street based accountancy practices. I am the founder and director of My Accountant Online, an online accountancy practice that isn't run out of a bedroom or converted garage. I think that qualifies me to be a 'proper accountant'.

That aside I am a human being I dont know all of the answers all of the time - our UK tax legislation is extremly complex and on ocassions I do actually have to refer to tax specialists or legislation if I am researching a specific matter.

Tim123 · Dec 16, 2010

Hi It seems that there is no legislation in place to complete self assessment as a director but is is recommended in order to save problems in the future. My main question which i think has been answered is what year will the tax return be. If i became a director after april 5 2011 then i will need the 2011/12 tax return. Can somebody please confirm this.

elaine@cheapaccounting · Dec 16, 2010

yes first tax return should you be asked to complete one is 2011/ 2012 due by 31/01/13

MyAccountantOnline · Dec 16, 2010

Tim123 said:
Hi It seems that there is no legislation in place to complete self assessment as a director but is is recommended in order to save problems in the future. My main question which i think has been answered is what year will the tax return be. If i became a director after april 5 2011 then i will need the 2011/12 tax return. Can somebody please confirm this.

In my experience you will find if you request a tax return and complete it showing no tax liability, in the following year HMRC will send you a standard notice stating that they have a have reviewed your tax affairs and following the review you will no longer be required to complete a tax return.

If you become a director after 6/4/2011 and request a tax return at some time after this you will be sent one for the tax year to 5 April 2012.

Interimsolutions · Dec 16, 2010

elainec100@cheapaccounting said:
yes first tax return should you be asked to complete one is 2011/ 2012 due by 31/01/13

One of the most straight forward responses I have read of yours. This is the way to do it. Well done on this accasion.

elaine@cheapaccounting · Dec 16, 2010

Interimsolutions said:
accasion.

Employment Law Clinic · Dec 16, 2010

Interimsolutions said:
This is the way to do it. Well done on this accasion.

How helpful of you to lecture established members on the way to do it Interim. I'm sure we could all take lessons from you... but then again, I suspect most of us with common manners & standards of decency have long since learnt the only lessons you could ever offer.

Karl Limpert

MyAccountantOnline · Dec 16, 2010

Thank you Karl.

David Griffiths · Dec 16, 2010

yackers1 said:
ElaineC - You need to get up to date and check the facts before you rubbish someone's answer so quickly!

Check out the HMRC website ( Iwould post the link but I have not made enough replies to be allowed to!). If you search for who needs to complete a tax return you will see on the page; that "Directors must complete a tax return unless it is a director of a not for profit organisation and don't receive any payments or benefits"

So, based on this Tim123 DOES need to complete a self assessment tax return.

With respect, you need to understand that the HMRC website is not the law, and if you believe everything that you read on there you will be giving poor advice to other people. Elaine has linked to the legislation, and it is that which is the basis of our tax system.

elainec100@cheapaccounting said:
David where are you?

Sorry to be missing! In fact, I was taking our server to our IT support people, as it didn't float when we had a two inch deluge of water from a burst pipe in the next unit. No server and no internet or email today or tomorrow morning, although we expect to be back in action midday tomorrow. No server means no accounts or tax returns being done either.

I hope that their insurane policy is up to date!

elaine@cheapaccounting · Dec 17, 2010

David Griffiths said:
With respect, you need to understand that the HMRC website is not the law, and if you believe everything that you read on there you will be giving poor advice to other people. Elaine has linked to the legislation, and it is that which is the basis of our tax system.

Sorry to be missing! In fact, I was taking our server to our IT support people, as it didn't float when we had a two inch deluge of water from a burst pipe in the next unit. No server and no internet or email today or tomorrow morning, although we expect to be back in action midday tomorrow. No server means no accounts or tax returns being done either.

I hope that their insurane policy is up to date!

My Knight in shining armour - Ok yes I have been at the Christmas Sherry!

:redface:

Thank you David.

I hope you get your water works sorted out very soon and that the bad weather doesn't add to the problem.

Seriously though if there is anything I can do please give me a shout.

David Griffiths · Dec 17, 2010

elainec100@cheapaccounting said:
My Knight in shining armour - Ok yes I have been at the Christmas Sherry! :redface:

Thank you David.

More Sir Cumference that Sir Galahad these days, alas!

elainec100@cheapaccounting said:
I hope you get your water works sorted out very soon and that the bad weather doesn't add to the problem.

Seriously though if there is anything I can do please give me a shout.

Thanks for your offer, Elaine, but as you can imagine the problem is access to the data. I've just been told that we aren't going to get it back until Monday, so that's the weekend screwed up as well. At least the data is intact but it looks like we're just going to get a lash up and be claiming for a new machine

elaine@cheapaccounting · Dec 17, 2010

oh dear - something that you just don't need at this time of the year

David Griffiths · Dec 17, 2010

It's bad enough normally, but of course the 31 December deadline for March company accounts effectively means Thursday next week! We've only got a few to finish, and thank heavens for online filing!

Alpha · Dec 17, 2010

David Griffiths said:
Sorry to be missing! In fact, I was taking our server to our IT support people, as it didn't float when we had a two inch deluge of water from a burst pipe in the next unit. No server and no internet or email today or tomorrow morning, although we expect to be back in action midday tomorrow. No server means no accounts or tax returns being done either.

I hope that their insurane policy is up to date!

We had server problem on our return from Cristmas earlier this year - 4 days without server and communications in January!!!

elaine@cheapaccounting · Dec 17, 2010

a business opportunity for someone - rent a server to accountants in busy period!

Elliit · Jan 14, 2011

I am not a tax expert at all. Just wanted to share my experience. I am director of a dormant company. Before reading all of this thread I called Self Assessment helpline and explained that I am a director of a dormant company and don't have any other income except from my full time employment, Do I need to file an SA return.

The person on line from HMRC side asked me ,Do I get any payments from the company at all, I said no, company is dormant and it is not operating. He said that I don't need to file return just because I am Director of a dormant company.

Thanks to all expert for posting such useful info.

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