A company director can face HMRC questions in two places at once: the company’s own returns and the director’s personal tax. Loans from the company, benefits in kind and dividends are where the two meet. Tax investigation insurance pays the accountant’s fees for defending both, and Solar Protect cover can include directors alongside the company, up to £100,000 with no excess.

Does every director need a Self Assessment return?

No. Being a director is not on its own a reason to file. HMRC’s online checker treats directors as working for themselves, but a director with only PAYE salary and no other untaxed income may not need a return. You must file if HMRC sends you a notice to file. GOV.UK also says that if your dividends are more than both your unused Personal Allowance and the £500 dividend allowance, you need to report them to HMRC. Our guide to directors’ tax responsibilities explains the duties.

Where do company and personal tax overlap?

  • Director’s loan accounts. If a director owes the company money at the year end and it is not repaid within nine months, the company pays section 455 tax, at 35.75% for loans made on or after 6 April 2026. See director’s loan accounts.
  • Benefits in kind. Cars, private medical cover and other perks are taxed on the director and carry employer Class 1A National Insurance. See benefits in kind and P11D.
  • Dividends. HMRC can check that the company had distributable reserves and that paperwork was in place. See how to pay dividends legally.
  • Salary and expenses. Personal spending put through the company can be treated as earnings or a loan.

How long does HMRC have?

For a Company Tax Return filed on time, HMRC normally has 12 months from the date it was delivered to open an enquiry. Personal returns have a similar 12 month window. After that, discovery assessments can generally go back 4 years, 6 years where the loss was careless and 20 years where it was deliberate.

What happens if HMRC finds an error?

The extra tax is due with late payment interest, and HMRC can charge a penalty. For a careless inaccuracy the maximum is 30% of the extra tax, reduced for disclosure; for deliberate errors it is higher. HMRC can sometimes suspend a penalty for a careless error, as explained in suspended penalties.

What does tax investigation insurance pay for?

It pays the professional fees of dealing with HMRC, up to the policy limit. Solar Protect cover responds to full and aspect enquiries into Corporation Tax and Income Tax, PAYE and National Insurance checks, IR35 and employment status disputes and VAT compliance checks, and directors can be included. It does not pay tax, interest or penalties, and it will not cover a check that started before the policy.

See also tax investigation insurance for limited companies and for contractors. Read how our cover works or get a quote today.

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 7 October 2026. This guide is general information, not personalised tax advice. Cover is subject to the policy terms, conditions and exclusions.