Am I in deep doo-doo?

[TheCyclingProgrammer]

So many questions.

Let’s start with easy one. If, since you started your Ltd co, you’ve taken nothing more than expenses, salary and dividends within the personal allowance and dividend allowance and as such are not liable to pay any income tax then you have no obligation to notify HMRC or register for self assessment, so stop worrying about that. You have a legal obligation to notify HMRC when you become chargeable to tax.

I’m assuming of course that HMRC haven’t sent you a notice to file a tax return for any year? If they send you a notice you’ll have to complete it.

Second thing, it’s possible to pay yourself a salary if you have no other job and are only earning up to the LEL without PAYE. Otherwise you should be operating PAYE.

Yes it seems like you should have been paying yourself dividends to at least use up any allowances you have assuming you have sufficient profits. You should have a serious conversation with your accountant about whether or not you are being tax efficient. If you aren’t happy with your accountant’s advice then get a new accountant.

Finally if you’re still in the same contract and are claiming travel expenses make sure you’re familiar with the 24 month rule.

[unixman]

Hi OP, as others have said most of this should be sorted by the accountant. If I can offer a bit of general advice:

- Slow down. Way down.
- Just look at one issue at a time
- Sort it out by working with your accountant
- When it is all resolved, move on to the next issue.

Running a company means that legally, you have to perform certain duties every year, by certain dates in that year. A good accountant will remind you of each date well in time and tell you exactly what to do (as Intouch does for me). Some of the dates relate to the UK tax year which starts every April 6th. Other dates relate to your company year, whose start date depends on the month your company was formed. Learn all of these dates and write them down.

Running a company is regarded as a privilege, and the duties above (eg. submitting annual accounts) are what goes with it. In the future, don't let any of them slip, not a single one. It seems complicated in the first year or 2 but is simlple, after that, as you are just doing the same thing every year.

[Chris@Intouch]

In order for any amount to be treated as a salary it needs to have been submitted via PAYE. In other words the £8,000 cannot be recognised as a "salary" unless a payroll scheme is set up for your company.
With the self assessment situation, if you haven't registered for a self assessment then HMRC will not have issued you a return. If you register properly now HMRC will give you some time to complete the necessary returns. However, unfortunately, if HMRC determine a SATR is due for the 2015/16 tax year then you are likely to receive a penalty for this, however they are likely to extend the filing deadline for the 2016/17 return.
If your wife is providing a service to the company then she can be entitled to receive a salary. Also under an exemption in the settlements legislation you can transfer shares to your wife who could then also maximise her tax free dividend allowance and basic rate band as appropriate.
In answer to your question about the pension, yes a salary over the lower earnings limit is a qualifying year for state benefits. HMRC will pick this up themselves through the payroll submissions discussed in my first point.

[gazelle]

So many questions.

Let’s start with easy one. If, since you started your Ltd co, you’ve taken nothing more than expenses, salary and dividends within the personal allowance and dividend allowance and as such are not liable to pay any income tax then you have no obligation to notify HMRC or register for self assessment, so stop worrying about that. You have a legal obligation to notify HMRC when you become chargeable to tax.

Hi Mate,

Thanks very much for the info - this has put my mind at rest!

I’m assuming of course that HMRC haven’t sent you a notice to file a tax return for any year? If they send you a notice you’ll have to complete it.

No, I haven't received a notice to file.

Second thing, it’s possible to pay yourself a salary if you have no other job and are only earning up to the LEL without PAYE. Otherwise you should be operating PAYE.

Yes it seems like you should have been paying yourself dividends to at least use up any allowances you have assuming you have sufficient profits. You should have a serious conversation with your accountant about whether or not you are being tax efficient. If you aren’t happy with your accountant’s advice then get a new accountant.

Finally if you’re still in the same contract and are claiming travel expenses make sure you’re familiar with the 24 month rule.

I was relying on the accountant to tell me what I need to do - He did the Corp Tax return then after that he didn't mention anything about declaring dividends.
Yes, I'm going to have a proper conversation with him - at least now I feel I'm going fully prepared with knowledge and reassurance, I'm getting all my questions together, and try and get this sorted.

[TheFaQQer]

Let’s start with easy one. If, since you started your Ltd co, you’ve taken nothing more than expenses, salary and dividends within the personal allowance and dividend allowance and as such are not liable to pay any income tax then you have no obligation to notify HMRC or register for self assessment, so stop worrying about that. You have a legal obligation to notify HMRC when you become chargeable to tax.

Whilst I agree with that (and it's absolutely correct, given the current legislation), it might be worth noting that HMRC's guidance is that you need to complete a self assessment because you are a director. So be prepared to argue / show / get them to try to prove that is correct - their guidance is not correct, you do not have to complete one just because you are a director, unless HMRC ask you to complete one.

No doubt with MTD this will all become simple.

[TheCyclingProgrammer]

Whilst I agree with that (and it's absolutely correct, given the current legislation), it might be worth noting that HMRC's guidance is that you need to complete a self assessment because you are a director. So be prepared to argue / show / get them to try to prove that is correct - their guidance is not correct, you do not have to complete one just because you are a director, unless HMRC ask you to complete one.

No doubt with MTD this will all become simple.

Whilst this is true, it only means HMRC are more likely to send a notice to file at some point and probably won’t withdraw it even if no tax is owed. At the point it’s probably easier to just do it than argue with HMRC.

They can’t be penalised for failing to notify because failure to notify penalties are always based on the tax not declared, in this case zero.

So yes, expect a notice at some point but still nothing to actually worry about.

When OP starts taking more dividends they will inevitably have to registered anyway.