A question often by asked by directors of small limited companies is ‘do i have to file a self assessment tax return?’

The answer is straightforward

  • If HMRC have given you a notice to file a tax return then YES otherwise
  • NO

This is a rule which applies to Individuals, Trustees and Companies and there is currently one exception which is for non UK residents who dispoase of relevant UK property.

Where did the confusion arise?

Well in HMRC guidance as to who should complete a tax return it includes the following :

you were a company director – unless it was for a non-profit organisation (such as a charity) and you didn’t get any pay or benefits, like a company car’

Following its own guidance HMRC asserted in the recent case of Kadhern v HMRC that ‘as a company director one of the directors responsibilities is to register for self Assessment and send a personal tax return to HMRC without prompt or reminder’ and that HMRC ‘do not issue reminders to file returns and have no obligation to do so (An excuse HMRC have used in several circumstances where penalties are issued) and thus sought to charge Mr Kadhern £1300 in filing penalties.

Fortunately the First Tier Tribunal (FTT) ruled that ‘NO ONE has any obligation to file a self assessment tax return without being requested to do so.’

So what are the obligations if not to file a self assessment return unless HMRC demands one?

Essentially you only have to notify HMRC of any circumstance in which you will be chargeable to income or CGT for a tax year, normally within 6 months of the tax year end.

Crucially there are exceptions

  • If you have no chargeable gains
  • You are not liable to the ‘high income benefit charge’ and all your income is either taxed under PAYE or coded out
  • You have received taxed income or dividend income of an amount which would not be taxed

Not of these circumstances mentions ‘being a director’