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To check that a company tax return is complete and correct, information about the directors� personal financial and tax affairs is often needed and you should consider extending enquiries into the directors� returns when a company tax return is taken up for full enquiry. Guidance on enquiries into close companies is at EM8500+.

SA legislation provides no direct link between the CT return of a company and the returns of its directors, and non-director participators of a close company. A notice of enquiry into a company tax return does not automatically put the directors� returns under enquiry. If enquiries into a director’s returns are to be made a Section 9A notice must be issued. Where enquiries into a company tax return and directors� returns are linked, the company and the individual directors could apply separately to the tribunal for a direction to complete the enquiry into their own return EM1975+.

The absence in the SA legislation of a direct link increases the need for co-ordinating compliance activities in respect of companies and their directors/participators. The case owner responsible for the company tax return is responsible for co-ordinating the compliance activity. Where no company enquiry will be opened or only an aspect enquiry with no implications for the directors� returns, authority should be given to undertake a separate enquiry into the directors� returns. In other cases consideration should be given to opening linked director enquiries.

There will be situations where enquiries do not necessarily need to be linked but information is obtained during a company enquiry that will be relevant in risk assessing the returns of directors or other employees. An example might be entertaining expenditure of a non close company. Such information should be passed on by the officer dealing with the company enquiry.