Self Assessment

[rjustice]

Hi all,

I became a contractor at the start of Feb 2013. I was a salaried worker before that. My accountant has told me that I do not need to fill in a self assessment for the 2012-2013 tax year. I have taken dividends for the 2012-2013 tax year, about £9k for that 2 month period. His justification is that is not necessary if I am under the higher tax threshold for the year and I have not had a letter saying that I should fill in a self assessment. Could I get a 2nd opinion on this as it seems strange that I would not need to do a tax return even if it is just to prove that I do not need to pay any higher rate tax? Also, I will have student loan contributions for 2012-2013 to pay but the accountant says I can roll this into the subsequent years tax return.

[Wanderer]

His justification is that is not necessary if I am under the higher tax threshold for the year and I have not had a letter saying that I should fill in a self assessment.

He is probably right, but you could tell him you just want to do one anyway for your own peace of mind though that won't make you Mr popular this close to the deadline.

[TheCyclingProgrammer]

There's two views as to whether you need to submit one:

* HMRCs view
* The law

The two don't necessarily align, or HMRC's guidance is just written poorly. They lost various scenarios where you MAY have to register for SA but as far as I'm aware there are only two scenarios in which you MUST submit a return, legally:

1) You have income to declare that is chargeable to tax.
2) HMRC have sent you a letter asking for one.

On the face of it, if you have no tax to pay and you haven't had a letter from HMRC I would say you are fine.

However, it could be argued that all dividends are chargeable to tax, it's just that the basic rate tax is cancelled out by a tax credit. Whether this means you should strictly register for SA....I don't know.

There would be little harm in ringing HMRC and asking them but they will be busy. Perhaps you should have checked this a few months ago instead of 10 days before the deadline.

You're probably fine though.

[Scruff]

imho

It is your responsibility as a Company Director, to inform HMRC that you wish to register for Self-Assessment. They do not inform you...

You are required to complete an SA form for the 2012-2013 Tax Year and need to declare your Dividend income stated as a Shareholder of your MyCo. Even though you might fall below the high tax threshold, they still need to be declared.

[Clare@InTouch]

I would agree that it's best to file one, even if nothing is due.

Did you actually inform HMRC that you were a director when you set up your company? If so, they would usually have requested one. If you didn't tell them and they therefore didn't know to request one, there's the possibility for them to argue that they would have requested one if you'd told them, which under self assessment it's your responsibility to do. It just prevents any issues later on.

If it's a simple return and you offer chocolates then your accountant shouldn't mind preparing it for you. Unless you leave it to the 31st, then they'll probably just cry if you ask.

[Craig at Nixon Williams]

It is your responsibility to inform HMRC that your circumstances have changed and therefore need to file a self-assessment return. HMRC will not know your circumstances, and will therefore not know to ask you to file a return until you tell them.

Our advice on this is that a tax return should be filed as there is HMRC literature out there that says that a self-assessment should be filed if you are a director – when somebody becomes a client we will pre-fill an SA1 (link: http://www.hmrc.gov.uk/sa/forms/sa1.pdf) for them to send to HMRC - that way the new director has done their bit in telling HMRC.

Craig

[Jessica@WhiteFieldTax]

I'm with Wanderer, Clare & Craig on this one. File to be on the safe side.

If (a) you've given your accountant the information and (b) they are doing their job it should be easy and painless. Its merely reporting what you should have checked and know anyway.

[rjustice]

Ok, thanks for your responses. I will complete a self assessment for 2012-2013. My accountant has told me that I will need to wait for a UTR so I will miss the 31st and so have to pay a £100 penalty. Pretty annoying but I would prefer to take the hit and put my mind at rest. Rookie mistake.

[Jessica@WhiteFieldTax]

No, I don't think you need to pay a penalty.

I'd need to check the detail as its changed in the last year or so - someone else my have it at their fingertips - however

(a) penalty only applies if a SAR was issued to you and not returned by later of 31.1 or 3 months after issue. You say one wasn't issued.

(b) in which case there is only a penalty for not notifying changeability. This is geared as a percentage of "tax at risk" (paraphrasing), but if you don't owe anything then theres a good argument that no penalty is due. TBH I doubt one will be raised, if it was there are grounds for appeal and then, if that fails, suspension subject to future compliance.

Subject to engagement terms, however, this is your accountants problem not yours.

[TheCyclingProgrammer]

Is there legislation that says company directors must file tax returns? I'm not sure there is.

Regardless, I still think the best thing you can do is ring HMRC and ask them if they think you should submit one. They may well say no as it's not in their interest to fill up the SA system with people submitting what are effectively nil returns.

If they say yes get them to send you a letter requesting one. If they say no, then it's your choice. Get a call reference.

I realise I'm playing devils advocate, I just dislike pointless paperwork and that's essentially what you'd be submitting.

Having said all that, filing a SA is a piece of piss unless your affairs are particularly complex (yours won't be) and it only takes 15 minutes and a cup of tea/coffee to get done.