Director’s and personal tax returns

For years HMRC insisted that a director must register for self-assessment and complete a tax return even if there was no income to report. This was not a legal requirement, but an HMRC imposed requirement! In 2015/16 at a First Tier Tribunal (FTT) the judge said that no one has a statutory obligation to do anything in relation to income tax simply because they are a director of a company that in not a not-for profit company! Being a director per se does not entitle a person to dividends. The tribunal concluded that if dividends received from the company of which a person is a director were to generate an income tax liability, then there is a duty to notify HMRC of the chargeability to income tax but not because of being a director!

Finally HMRC have amended their guidance to say that a director does not have to complete a tax return simply by being a director as long as their income is below £50,000 and they have no other taxable income.