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Director wins appeal against penalties for late tax return
A company director has won his appeal against penalties imposed by HMRC for failing to submit a self-assessment tax return on time.
The tribunal held that it was not the responsibility of a director to register for self-assessment and send a personal self-assessment tax return each year unless there was a prompt or reminder from HMRC.
The director had been appointed in May 2014. He received no remuneration as a director but was paid a salary as an employee. He paid tax on that through PAYE.
HMRC alleged that they sent him a notice to file a self-assessment tax return on 6 April 2015. The date for filing self-assessment tax returns was 31 January 2016.
HMRC imposed a penalty for late filing in February 2016. The director denied having received either the notice to file a self-assessment tax return or the late filing penalty notice. On 12 August, HMRC imposed a six-month penalty notice and daily penalties. The director received those notices and filed a tax return on 21 September.
The FTT (Tax) upheld the director’s appeal against the penalties.
It held that it was not the responsibility of a company director to register for self-assessment and send a personal self-assessment tax return each year without prompt or reminder from HMRC.
HMRC had relied on a government guidance notice on running a limited company which stated that directors had to register for self-assessment and send tax returns. However, that guidance did not have the force of law and the director was under no obligation to follow it.
The guidance did not accurately reflect the requirements of the Taxes Management Act 1970, which states that if a person “received a notice to file a return, they were under an obligation to do so by the due date”.
The tribunal was not satisfied that HMRC had sent a notice to file a self-assessment tax return to the director, or that, if one had been sent, it had been sent to the correct address. Without such a notice, the director had had no reason to believe that a self-assessment tax return was required. He had paid tax on his employment through PAYE and had no other income to declare.
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