Reply to: Wife as shareholder

[Fred Bloggs]

As you suggest just have her resign.

Dont bother with previous years returns.

I had to contact HMRC many times to get them to have me set up for SA.

That's the plan, wheels are in motion

[prozak]

Thanks Clare, it seems sensible for Mrs B to resign her directorship I think, just stay as co sec and shareholder. Reduces further exposure to any issues. Biggest issue of doing SA's for years back would be tracking down the small amounts of bank account interest to report.

As you suggest just have her resign.

Dont bother with previous years returns.

I had to contact HMRC many times to get them to have me set up for SA.

[Fred Bloggs]

It's just the risk of having to have the argument with HMRC about the legal necesssity for filing a tax return - if there were any penalties you could appeal, and if no tax is due then the penaly should be reduced to zero anyway, but it just saves having that trouble in the first place. If the SATR is simply dividends and salary then it's easy enough to do online too.

Thanks Clare, it seems sensible for Mrs B to resign her directorship I think, just stay as co sec and shareholder. Reduces further exposure to any issues. Biggest issue of doing SA's for years back would be tracking down the small amounts of bank account interest to report.

[Clare@InTouch]

That's how I saw it too, but Clare above, raises the possibility of Mrs B being hit with penalties for non completion. It is Bloggs Ltd Co year end in a few months time (July IIRC), I think I'll suggest she resigns as a director from the new Ltd Co year so we draw a line under the number ofpotential penalties that could be applied. We are certain no tax is due.

It's just the risk of having to have the argument with HMRC about the legal necesssity for filing a tax return - if there were any penalties you could appeal, and if no tax is due then the penaly should be reduced to zero anyway, but it just saves having that trouble in the first place. If the SATR is simply dividends and salary then it's easy enough to do online too.

[Fred Bloggs]

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.

That's how I saw it too, but Clare above, raises the possibility of Mrs B being hit with penalties for non completion. It is Bloggs Ltd Co year end in a few months time (July IIRC), I think I'll suggest she resigns as a director from the new Ltd Co year so we draw a line under the number ofpotential penalties that could be applied. We are certain no tax is due.

[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.

[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]

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.

[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.

[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.

[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.

[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.

[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?

[Underscore Pt2]

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

[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