Self Assessment as student required?

[leadingbyexample]

Hi guys,
Sorry for a rather lengthy post. I’d really appreciate some help with my situation.

I am a part-time student in higher education. I am a EU resident paying UK student fees. I live with my parents who also fund most of my study expenses. Because of cost and field work aborad, I only come to UK during term time or when required to meet with my supervisors.

I am, however, also the sole director of a small limited company which provides services relating to my studies. The company was initially set up by two directors, but the co-director left and I have since then taken over the business. The company has currently very little revenue (about 12-15K pA). All cooperation tax is paid of course. The few clients I had in 2010/2011 where all from abroad. Thus far, the company is only a vehicle for opportunities arising. I am hoping to be able to turn my degree into a future job and also grow the business when I am done with my studies.

For the tax year of 2010/2011 I have drawn a dividend of 650 GBP from my UK company. I used it as a contribution to fund my studies. I also had a UK small job of about 1200 GBP which I did as self-employed. I did this outside the company to avoid sharing it with the other director. I have so far been reporting any income from the UK business to the authorities in my EU home country (we have a DTT in place). They are surprised I even bother to report those sums and say it is insignificant. Filing for SA seems way to much effort for the monies we are talking about. Last year I had no income other then the 1.850 GBP.

HMRC have never contacted me to request SA. Previously, I had only been employed by the university as a part time tutor and my contract ended more than a year ago. Actually, I got a tax refund last year as I was below the taxable allowance. For this income I was also on emergency NIN. I pay all healthcare and other contributions in my home country and with little employment history there was no need for applying for a real NIN in UK.

However, until today I did not realise that any director of a UK company is required to file for SA and complete a tax return irrespective of residency and amount of dividends drawn? Now I am really worried that I may have to pay a fine if I do not file for SA. Especially, since I am now sole director.

After reading in this forum, it seems there is no statutory obligation on for me to notify HMRC of my status, and I cannot be penalised for not completing returns that have never been issued? I also understand that unless there is a tax liability (i.e. if I am above the tax free income allowance?) there is no legal obligation to advise HMRC when appointed director. Hence, if my income is too low I can not be held to account for informing HMRC about it?

As you can see, I may confuse a few things here and any advice will be useful. I am currently not in UK and I would need to ask HMRC to send the SA form to my home country if I apply. This may actually take longer than I have time submit my file online. Also, I do not have a NIN. I could try to ask them to send the confirmation letter to a friend who will fax it to me. But am I really required to do this? What if I don’t file the SA? Is it worth the trouble?

Any help and advice would be appreciated.

Kind regards,
Tom

[leadingbyexample]

If this is the UK's leading independent tax information website...why is there no one on here to actually reply to my question?? a bid odd really...is there a forum where you can actually get some advice?
Cheers!

[wamstax]

You are probably lucky to get this response given your 2nd posting. We do this for free and January is usually a busy month whoever you are in the tax advice sector. Why is it that people always leave it till the last two weeks of Janauary before they start to panic and expect immediate responses

Anyway the tax deducted on dividends is non-refundable so there is no need to submit a claim for repayment of any tax.

As to the duty to advise HMRC it is the company's responsibility to submit either a form P46 or a form P45 (if the director has been in previous employment) to HMRC to advise that they have a director on their books. You normally have to advise HMRC that you have commenced self employment within 3 months of having commenced and to pay any National Insurance that may be required under Class 2.

As regards completing a tax return you would have 3 months to complete the form after HMRC issued your first one. To consider whether you need a tax return please refer to the attached link - http://www.hmrc.gov.uk/sa/need-tax-return.htm

Of course you may also have to refer to any Double Taxation Agreement between your "home" country and the UK to see whether any of your non-director/shareholder income was chargeable to UK tax .

I hope that this helps you

[leadingbyexample]

Thanks Wamstax. You help is much appreciated. I guess it´s always the same each year with people checking their duties in the last minute. Trust me, I am glad there is a responsible soul out there!

Re the issue of P45/P46. I am surprised my accountant did not make me aware of that as he set up the business and provides all info to company house. If I understand you correct these forms only apply if I would have been paid a salary as director to advise HMRC that they have a director on their books? I only got a dividend, no salary.

As I understand from the HMRC website you have posted: anyone who is a company director must complete a return. However, if I am under the Personal Allowance and don't pay tax through PAYE it is not required?!

"You normally have to advise HMRC that you have commenced self employment within 3 months of having commenced and to pay any National Insurance that may be required under Class 2." --> that is if I only earn and live in UK?!?

The DTA in place states that if I primarily reside and earn in my EU home country I have to pay tax there and also report any income I may have had from UK. The tax rate on this income is actually higher than the 10% on the dividend I would pay here in UK, but as my primary residence and source of income is there, this is what applies.

This changes however, should I not earn anything in my home country and only in the UK. Then I would have to file for SA with in 3 months and report and pay tax on anything above the PA (incl. any taxable income from there e.g. generated as director of a UK company).






If (and that is a big if from a novice) I am correct, the only trouble is

[mullet]

Trust me, I am glad there is a responsible soul out there!

There are many of us. But as Wamstax said, this is a busy month. And your original post was quite long. And you bumped it.