HMRC states that a company director MUST complete a tax return but does this requirement have a basis in law?
The relevant legislation in the form of Taxes Management Act 1970 (TMA) s7 states that it is mandatory for a company director to file a tax return IF a return HAS been issued and IF there is a liability to tax (emphases are ours).
Additionally HMRC manual EM4551 – Penalties: Failure to notify chargeability… – states that there is no requirement to notify chargeability where there is no liability to income tax or capital gains tax or where sufficient tax has been deducted at source to meet the net liability for the year.
No mention is made of directors being special cases and no exceptions are given.
So, essentially, if no return has been issued and there is nothing else income-wise to declare, there is nothing to notify HMRC of and if it tries to insist on a return being missed, the above references should be enough to quote.
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