Wife as shareholder

[THEPUMA]

A reason you may prefer a shareholder to be a director is so that they are eligible for entrepreneurs' relief, assuming they are not otherwise employed by your company.

It may be preferable to be company secretary so as to avoid the responsibilities which come with being a director (including submission of a personal tax return).

PUMA

[Underscore Pt2]

I wouldnt bother. Its just another thing she'll try and get off you in the divorce.

[Fred Bloggs]

A reason you may prefer a shareholder to be a director is so that they are eligible for entrepreneurs' relief, assuming they are not otherwise employed by your company.

It may be preferable to be company secretary so as to avoid the responsibilities which come with being a director (including submission of a personal tax return).

PUMA

I have read a couple of thread like this recently about directors and tax returns. Mrs Bloggs is a director, a 50% shareholder and co sec of Bloggs Ltd. We keep her divis and her salary (from another job) below the 40% threshold, therefore, there is no personal tax liability. I understand that under self assessment for tax, we have made the assessment for a tax return and there isn't one required. HMRC might "like" a self assessment from Mrs Bloggs but I understand HMRC are not legally bound to expect one, not unless we know there is a tax liability. Am I right?

[malvolio]

I have read a couple of thread like this recently about directors and tax returns. Mrs Bloggs is a director, a 50% shareholder and co sec of Bloggs Ltd. We keep her divis and her salary (from another job) below the 40% threshold, therefore, there is no personal tax liability. I understand that under self assessment for tax, we have made the assessment for a tax return and there isn't one required. HMRC might "like" a self assessment from Mrs Bloggs but I understand HMRC are not legally bound to expect one, not unless we know there is a tax liability. Am I right?

Sorry, but a Director is legally required to compete an SA form.

[Clare@InTouch]

Sorry, but a Director is legally required to compete an SA form.

I don't think they are - HMRC state that they are required to, but it's not backed up by the legislation itself.

Personally we'd recommend directors' file a tax return anyway, it's better to be ahead of HMRC than to try to argue the finer points of the Taxes Management Act with them after they've issued a penalty for non-filing.

[Fred Bloggs]

Thanks, Mrs B hasn't done a SA return for the last ~9 years we've been running Bloggs Ltd. I'm thinking it might be better for Mrs B to resign as a director but stay as co sec and shareholder. Another SA form is hassle we can do without really.

[malvolio]

I don't think they are - HMRC state that they are required to, but it's not backed up by the legislation itself.

Personally we'd recommend directors' file a tax return anyway, it's better to be ahead of HMRC than to try to argue the finer points of the Taxes Management Act with them after they've issued a penalty for non-filing.

OK, accept that. But the working assumption from HMRC is that a Director has unearned dividend income that would need to be declared. Not doing an SA and being known as a Director would be a good way for Hector to take a deeper look at your finances. They may be perfectly in order, but why take the risk.

[ASB]

Thanks, Mrs B hasn't done a SA return for the last ~9 years we've been running Bloggs Ltd. I'm thinking it might be better for Mrs B to resign as a director but stay as co sec and shareholder. Another SA form is hassle we can do without really.

There is a shortened version of the form which can often be used.

[Fred Bloggs]

Hmmm, question now is whether to try to do SA's for all those missed years and possibly invite more interest from Hector, or quietly resign as a director and hope for the best. We are certain that we have no unpaid tax owing.

[ASB]

Hmmm, question now is whether to try to do SA's for all those missed years and possibly invite more interest from Hector, or quietly resign as a director and hope for the best. We are certain that we have no unpaid tax owing.

There is no actual legal obligation to do a SA as a director. There is an obligation to do one if asked or if tax is owing. So, provided you are certain there is nothing owing you have no problem.