Not all Directors have to complete a tax return

Before July 2017, all directors of limited companies had an obligation to file tax returns.  Since then, HMRC has made changes to its guidance on the requirement to file tax returns by directors as a result of the outcome of a tribunal in 2017 with Mohammed Salem Kadhem vs HMRC.  The conclusion being that HMRC guidance published on their website is not actually law.

The facts of the tribunal case: Mohammed Salem Kadhem vs HMRC

Mr Kadhem was appointed a director of Tadmor Property Services Ltd on 27 May 2014 and he submitted his tax return for 2014-2015 electronically after he received a penalty statement for failure to file his tax return. Mr Kadhem argued that he never received a notice to file a tax return from HMRC and HMRC argued that as a director he should have registered and filed his tax return without any prompt from them. The interesting aspect to this case was that HMRC provided guidance to limited company directors stating the same, but the tribunal decision ruled ultimately that this guidance was not law.

In the end, the decision ruled that the taxpayer had a reasonable excuse for filing his tax return late as he did not receive a reminder, disagreeing with HMRC and noting that this request for automatic filing of tax returns by company directors was not noted in tax law, even if HMRC had published guidance via their website suggesting otherwise.

So, when should a director submit a tax return?

An individual, including a limited company director, is required to fill in a tax return when:

  1. You receive a notice from HMRC to file
  2. You have tax relief or refund to claim
  3. When you have income to declare, outwith your employment salary, if applicable

Mirandus supporting small business directors

At Mirandus Accountants, we understand what it is like to be a small business owner, as we are a small business ourselves.  As a chartered tax advisory practice, we provide tax expertise with empathy and understanding tailored to your own unique set of circumstances.

Call us to book a free no-obligation meeting today.