Directors’ Payments and RTI Returns – Tip

If you are a director of your own company, whether the sole director or not, then your salary payments need to be reported through RTI.

This was confirmed in a recent case where a director had been paid but had not operated PAYE on his salary because he maintained that he did not have a contract of employment. He put the salary directly on to his self-assessment tax return. The effect of this was that he and the company did not pay national insurance. HMRC have now caught up with him and are NIC charging arrears and penalties.

Penalties were also charged for failing to file returns under RTI.


HMRC argued that:

• the PAYE Regulations 2003 require RTI returns be made for all employees.

• the term “employee” in those regulations is defined.

• that section provides that the term “employee” includes office holders; and

• directors are officer holders.


The decision of the tribunal was that:

• as a director, the director was an office holder.

• the term ‘employee’ includes office holder;

• the PAYE Regulations impose an RTI obligation for all employees.


As a result, the company was required to complete RTI returns. The Tribunal found that the company did not have a reasonable excuse for failing to file RTI returns as ignorance of the law did not provide a reasonable excuse.



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