HMRC has updated its guidance to clarify that anyone chargeable to income tax or Capital Gains Tax (CGT) must tell HMRC they are chargeable to tax if they have:

• not received a notice to file a return; or
• received a notice to file a return and HMRC has agreed to withdraw the notice.

There are exclusions to this rule, including:

• individuals in receipt of a Simple Assessment (unless they are chargeable on anything that is not included in the assessment);
• individuals whose income has been taxed at source; and
• individuals not liable to the high income child benefit charge.

Many company directors are taxed under PAYE and so will not need to give notice of liability to tax, provided they have no other untaxed income.

HMRC can choose to issue a notice to file a self assessment return (under section 8 Taxes Management Act 1970) to any individual. Anyone receiving a notice to file a tax return must do so by the required deadline, or they may be liable to a late filing and/or a late payment penalty.

If an individual has received a notice to file and has no other taxable income to report, they can ask for the notice to file to be withdrawn. However, HMRC may decide that it still requires a return and if so, the return must be submitted, otherwise penalties may be incurred.

This change to the guidance was highlighted in HMRC’s Agent Update 69 issued on 12 December 2018.

Self Assessment tax returns guidance is available here. 

Report by Amy Austin