The First-Tier Tribunal recently decided that HM Revenue & Customs were wrong to assume that all Company Directors are required to complete a Self Assessment Tax Return (Mohammed Salem Kadhem v HMRC).
The taxpayer appealed against HMRC penalties for failing to submit his Tax Return because he owed no tax – the only source of income being his salary with tax deducted under PAYE. Although he was a Company Director he had not been issued with a Tax Return to complete.
While HMRC relied on their guidance which stated you will need to send a Tax Return if you were a Company Director, the Tribunal found that this did not accurately reflect the law.
So in what circumstances must you file a Tax Return? A Tax Return must be submitted to HMRC if you have been sent a Tax Return in the post or you have received a “notice to file” letter.
If you have any tax to pay for the year ended 5 April 2017 and you have not been issued with a Tax Return, HMRC must be notified by 5 October 2017. They may then decide to issue a Tax Return or arrange for tax to be coded out through PAYE.
As in this case, if HMRC haven’t asked you for a Tax Return and you have no income on which you have any further tax to pay, then you are not required to file a Tax Return.