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Judge Decides Directors Don’t Always Need to File Tax Returns

Judge Decides Directors Don’t Always Need to File Tax Returns

A tribunal judge has expressed the view that company directors don’t necessarily need to file tax returns to HMRC.

The relevant case saw a company director called Karen Symes contest a £100 penalty for not filing a self-assessment tax return with the judge apparently unconvinced that she was required by law to do so given that she received no income as a director during the period in question.

In the view of the judge, the taxpayer in the case did not have an obligation to notify HMRC of her position as a company director because she didn’t earn any amounts of money that might be taxable by virtue of being that position.

The tribunal considering her case heard that Ms Symes had filed a self-assessment tax return for the year 2016/17 on the advice of her accountant because she’d received dividends as a company director during that time.

HMRC then informed her that she should also have filed a return for the year 2015/16, despite the fact that she hadn’t received any dividends for that period.

Believing that her tax affairs for 2015/16 were properly handled via a form P800, Ms Symes assumed the notice from HMRC referred to 2016/17 and so she didn’t file a return for the previous tax year.

HMRC maintained its position that she should have sent a return for 2015/16 even though she did not receive dividends as a company director during that time and issued her with a £100 fine for not doing so within the required timeframe.

Contesting that fine, Ms Symes indicated that she relied on the guidance of her accountant who was convinced that by law there was no need for her to file a return to HMRC for a year during which she had taken no dividends.

The tribunal ultimately decided that Ms Symes did have a reasonable excuse for not filing her return with HMRC for the year 2015/16 because she was being advised by her accountants whose view on the matter was legally correct.

“No one has a statutory obligation to do anything in relation to income tax simply because they are a director of a company which is not a not-for-profit company,” the tribunal judge said.

“The statutory obligation on every person is to notify liability if they are chargeable to tax and their income and gains do not fall within at least one of the exceptions.”

David Tattersall
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