Reply to: Dividend vs Higher Rate Tax - what does the panel think?

[TheCyclingProgrammer]

Out of curiosity, does your accountant tell his other clients, who are either directors and/or have no tax to pay but have investment income over £10,000, not to do a tax return?

I don't know but I imagine he would say what he said to me, I.e. HMRC say you should do one but there is no legal basis for that and the law says you don't, so your choice (I wasn't asking about me, as I do have other reasons to file one, but for my partner).

If I was ever questioned by HMRC, I would simply point them to their own manual on SA, that I linked to earlier, which clearly states there is no obligation to notify them unless you have untaxed income and which directly references the appropriate section of the legislation.

[Martin at NixonWilliams]

My accountant agrees with me anyway.

Out of curiosity, does your accountant tell his other clients, who are either directors and/or have no tax to pay but have investment income over £10,000, not to do a tax return?

[DirtyDog]

There's every chance of course that after a few years of nil returns, HMRC will write to you and ask you to stop sending them, if you aren't a company director at least.

I think you are possibly crediting HMRC with some degree of common sense that they don't possess.

[TheCyclingProgrammer]

It's ok for you to as you know the rules inside out, unfortunately we usually have these discussion on a thread opened by a newbie who doesn't know the rules and possible outcomes.

Fair enough. I do acknowledge there is no harm in just registering and submitting one, I think I just have an allergy to unnecessary paperwork.

There's every chance of course that after a few years of nil returns, HMRC will write to you and ask you to stop sending them, if you aren't a company director at least.

[northernladuk]

I do see where you are coming from, but for me it's one thing to say you MUST do it (which implies that you are legally or morally obliged to) or that you should do it if you want to err on the side of caution. It's the former that I object to. I don't object to anybody advising a cautious approach.

That said, it really does depend on how complicated your tax affairs are. If your affairs are simple then you shouldn't have any surprises and you should be able to say with come confidence whether or not you owe any tax.

I just don't see how the risk of not filing when you should have is any different than filing but getting your return wrong. If you aren't on top of your own affairs then by all means register and leave it to your accountant if you wish. There's also nothing wrong with the approach if not filing if you're confident you don't owe any tax.

As I said before, your maximum exposure, penalty wise, for not filing is the total tax owed. If you are registered, you can end up with penalties even if you don't owe anything!

And I see where you are coming from and you back it all up with solid facts so hard to argue but there is always the grey area of getting in to an argument with HMRC themselves which is a situation you don't want to get in to defendable or not. It's ok for you to as you know the rules inside out, unfortunately we usually have these discussion on a thread opened by a newbie who doesn't know the rules and possible outcomes.

[TheCyclingProgrammer]

But we don't know. Spend 10 mins filing it and no surprises will come your way. Don't file it and hope there are no surprises coming your way. There is a wrong and a right way there for me.

I do see where you are coming from, but for me it's one thing to say you MUST do it (which implies that you are legally or morally obliged to) or that you should do it if you want to err on the side of caution. It's the former that I object to. I don't object to anybody advising a cautious approach.

That said, it really does depend on how complicated your tax affairs are. If your affairs are simple then you shouldn't have any surprises and you should be able to say with come confidence whether or not you owe any tax.

I just don't see how the risk of not filing when you should have is any different than filing but getting your return wrong. If you aren't on top of your own affairs then by all means register and leave it to your accountant if you wish. There's also nothing wrong with the approach if not filing if you're confident you don't owe any tax.

As I said before, your maximum exposure, penalty wise, for not filing is the total tax owed. If you are registered, you can end up with penalties even if you don't owe anything!

[aoxomoxoa]

Thanks for the heated debate

The real question, as per my original post, was about whether I should forego some dividend revenue on the one hand, versus mrs a going into the 40% bracket. We've decided on the former, and in addition I'll be shovelling some cash into my pension fund when we get nearer the end of myco's financial year.

Regarding SA - given that it'll only take mrs a about 15 mins to do it I'm inclined to think we will err on the side of prudence a la NLUK.

Cheers guys.

[northernladuk]

But thats besides the point. The point was that OP's wife hasn't needed to register for SA because she hasn't owed any additional tax and NLUK was wrongly implying that he was wrong and was going to be in the tulip. Which is, frankly, bollocks.

But we don't know. Spend 10 mins filing it and no surprises will come your way. Don't file it and hope there are no surprises coming your way. There is a wrong and a right way there for me.

I'd be more worried if my accountant was telling me that I had to do things without justification and any understanding of the underlying legislation.

Can't argue with that in some cases but if it is erring on the side of caution whatever the risk then sounds ok advice to me.

[TheCyclingProgrammer]

Your accountant's advice differs from mine in so many different ways, I'd love to know who it is, just to know who to avoid.

I'd be more worried if my accountant was telling me that I had to do things without justification and any understanding of the underlying legislation.

[TheCyclingProgrammer]

It takes five minutes to complete if it's straightforward. If you should have done one and didn't, HMRC can ask for the tax owed, plus the time and effort you now need to put in in resolving their inquiry.

I don't understand why people want to delay the inevitable, which is going to be more hassle later on, just to try to prove a point based on their interpretation of the law, which is at odds with the guidance provided by HMRC.

For the record, I do send a SA each year and have done for over 10 years. My last 5 have all been nil returns but I've had to do them because I've been asked for one each year. Because I'm a company director, I expect HMRC to continue requesting them.

And that's fine, you're right it doesn't take long at all.

But thats besides the point. The point was that OP's wife hasn't needed to register for SA because she hasn't owed any additional tax and NLUK was wrongly implying that he was wrong and was going to be in the tulip. Which is, frankly, bollocks.

[DirtyDog]

You do that. I'll follow my interpretation of the law. My accountant agrees with me anyway.

FTFY

[DirtyDog]

You do that. I'll follow the law. My accountant agrees with me anyway.

Nobody had been able to refute what I've said and if somebody can show me he legislation that says you have to file a SA when you don't owe tax I'll be happy to retract.

Your accountant's advice differs from mine in so many different ways, I'd love to know who it is, just to know who to avoid.

[DirtyDog]

Come off it. What risk? If you don't owe any tax then the risk is zero. What exactly do you think HMRC can do? As pointed out, the only penalty for failing to notify is capped at the tax owed. Which makes sense because there is no legal requirement to notify HMRC if you do not owe any tax.

I don't understand why people want to create unnecessary paperwork for themselves. Getting yourself into the self assessment when there is no legal OR moral obligation to do so is nonsensical.

It takes five minutes to complete if it's straightforward. If you should have done one and didn't, HMRC can ask for the tax owed, plus the time and effort you now need to put in in resolving their inquiry.

I don't understand why people want to delay the inevitable, which is going to be more hassle later on, just to try to prove a point based on their interpretation of the law, which is at odds with the guidance provided by HMRC.

Screw it, let's ignore what the law says and let HMRC dictate how we do things. Let's all stop pretending we aren't disguised permies and operate within IR35. After all, that's what HMRC would like isn't it?

Yes, they are comparable situations really

[TheCyclingProgrammer]

As seems to be the trend, you have an opinion which seems at odds with the advice that many (if not all) accountants posting here have.

I'll follow the expert advice and guidance provided by the professional I pay, though.

You do that. I'll follow the law. My accountant agrees with me anyway.

Nobody had been able to refute what I've said and if somebody can show me he legislation that says you have to file a SA when you don't owe tax I'll be happy to retract.

[DirtyDog]

We could dispute the badly written wording on that page all we like, it doesn't change what the legislation says and that's all that matters.

As seems to be the trend, you have an opinion which seems at odds with the advice that many (if not all) accountants posting here have.

I'll follow the expert advice and guidance provided by the professional I pay, though.