Quandary - Wife's Tax Return

[Kess]

My wife is an (unpaid) director of my Ltd. company so did a tax return last year. However, after that she received a letter from HMRC advising her that, based on the information they had, they wouldn't require any further tax returns and consequently she didn't receive any notification to do one this year.

However HMRC rules state that all company directors must complete a tax return or face a possible penalty. With the deadline looming we're wondering if she should ignore the HMRC letter and do one anyway.

We'll call HMRC on Monday to try to get clarification, but I wondered if anyone else here had been in the same position?

[northernladuk]

http://forums.contractoruk.com/accou...rn-spouse.html

http://forums.contractoruk.com/accou...ax-return.html

http://forums.contractoruk.com/accou...x-returns.html

http://forums.contractoruk.com/accou...-return-2.html

http://forums.contractoruk.com/accou...secretary.html


Any of those help? There are more if you try the search as detailed in the sticky in the Welcome/FAQ section

[ASB]

I guess the letter gives some comfort.

if you do a search it has been covered previously. There is no specific legal requirement for a company director to file.

If no notice to file has been received and all income is taxed then no problem.

[Kess]

Thanks. Believe it or not I did do a search but most of the results (e.g. the links suggested by NLUK) cover the scenario of a wife who is just a shareholder, not a formal director. I'll dig a bit deeper.

If no notice to file has been received and all income is taxed then no problem.

You're probably right, and HMRC's letter is very definite. I'm sure they know what they're doing...

[Wanderer]

I guess the letter gives some comfort.

if you do a search it has been covered previously. There is no specific legal requirement for a company director to file.

If no notice to file has been received and all income is taxed then no problem.

That would be my take on it too. If there is no tax due and HMRC have said that she doesn't need to do the SATR then I would file that advice away in a safe place and not worry about it.

Be careful that her circumstances don't change to trigger the need to a SATR at some time in the future though.

[ASB]

Kess, you will find a chunk of stuff on accounting web as to the actual requirements set down by law.

I am interpreting your question as "does my wife have to fill in satr because she is a director". The answer to that is no.

But be aware there could be other reasons. E.g. more than 10k in dividends. You can find hmrc view on their website. It doesnt make them enshrined in law though.

[Kess]

I am interpreting your question as "does my wife have to fill in satr because she is a director". The answer to that is no.

Exactly. All HMRC's Do you need to complete a tax return page says is that you must complete a return if you're "a company director (unless you're a director of a non-profit organisation, for example a charity, and don't receive any payments or benefits)". Hence my concern and confusion.

[xoggoth]

Yes it does but it isn't legally correct. As someone has said this has been covered on accounting web. I kept notes, here:

Q
Posted by andyrhb PM | on Wed, 28/09/2011 - 17:02
We have several director/shareholder companies where the directors take a small salary and dividends (and have no other income) which leaves them well below the higher rate tax band and therefore not liable to personal tax and they have not been requested to complete a self assessment tax return by HMRC - so a return isn't submitted.
My concern now however under the new self assesment penalty regime is that penalties can be imposed even where there is no loss of tax - so is there a danger that HMRC will fine directors for not informing them that they are directors?
A
It is policy not law
Despite the opinion of the HMRC staff their guidance is only opinion and sometimes their own policy. The legislation says that if you are asked to complete a return then you must do so.
A
No - directors are not legally required to submit tax returns
This has come up so often.
Tax returns for directors | AccountingWEB

A
From Euan's link, if you scroll up to the previous paragraph on HMRC site it advises that you *must* complete an SA return if you are a company director (subject to some specified exceptions). WRONG. S.7 TMA makes no reference to officers of companies as a criterion for notification. (It goes without saying, I think, that you must complete one if served with a notice to do so, whatever the income to be declared and whatever the tax consequences).
It beggars belief that so many accountants who should no better are willing to take on trust the guidance issued by HMRC. This comes up so regularly on AWeb.
A
The HMRC guidance HM Revenue & Customs: Do you need to complete a tax return?
which you are quoting is mostly wrong and thoroughly misleading to members of the public and apparently to some accountants.
Self-assessment | AccountingWEB

[Kess]

xoggoth - Many thanks for the detailed clarification. I must admit I had naively assumed the information on the HMRC site was definitive.

[Kess]

Just to end this thread, and as my accountant (NW) confused things again by advising that my wife must do a tax return because she's a company director, my wife phoned HMRC to ask the question.

HMRC confirmed that she did NOT need to do a return.