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July 13, 2017

Directors Not Required to Register for Tax

HM Revenue & Customs have long maintained that a director of a company is required to submit a Self Assessment tax return, even if there is no tax liability to report.

However, in the recent case of Mohammed Salem Kadhem v HMRC, the taxpayer successfully appealed a late filing penalty on the basis that there is no requirement in law for a director to register for tax by virtue of holding office.

In this case, the taxpayer’s only source of income was a salary which was subjected to PAYE.

Contrary to HMRC official guidance, the First-Tier Tribunal sided with the taxpayer and held that there was no requirement for a director to register for Self Assessment where there is no liability to tax. The guidance on which HMRC relied on was not an accurate reflection of the law.

This is a useful reminder that HMRC guidance does not have the force of law and is open to challenge where a different interpretation of the legislation can be made.

Contact us today to discuss your tax requirements.
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