< Go Back Directors are not necessarily required to file a tax return Posted: Oct 29, 2018 Alexander
Steele v HMRC  TC 06717
The First Tier Tax Tribunal (FTT) cancelled late filing penalties imposed by HMRC as there was no
legal requirement to notify HMRC of a change of address and no legal
requirement to file a return just because the appellant was a Director of a company.
HMRC sent the appellant notices to file a return for three
years. The notices were sent to the parentsí address and were not picked up; hence the returns were filed late. HMRC assessed the appellant to late filing penalties of £100 for each year.
The appellant was not legally
obliged to tell HMRC his new address as he only had PAYE income
in the years in question and his employer would have submitted information with his current address to HMRC. HMRC had issued notices to file (returns) however there was no legal requirement for a director to
file a return, he was under PAYE and a basic rate taxpayer. HMRC was
bringing the taxpayer into self assessment merely to collect a PAYE debt. The appellant could not have
known a Tax Return was required until he saw the notices which was after the
deadline had passed. A special reduction to the
penalties could be applied as having three late filing penalties
assessed at once meant that the appellant had no way of learning by his mistakes and correcting matters before being punished further for the same 'offence'.
therefore decided that the taxpayer had a reasonable excuse for not filing the returns on time. HMRC usually take the view that every Director of a company must submit a tax return each year; this decision by the FTT suggests that assertion isn't necessarily within HMRC's lawful authority and in some circumstances is wrong. This case and the recent case of Michael Griffiths (TC 06697) demonstrate HMRC's incorrect use of the Self-Assessment system to pursue PAYE debt and, in both cases, HMRC have been found out and were wrong to do so.
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