I have had some clients who are employers but there was no reason to pay a salary to the sole director. If there are expenses paid to a director that would usually go on a P11D does a P11D need to be submitted? I have looked on the 480, P11D and P11D Guide but I can't see any mention of what is needed. Does anybody have a link?
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Did you actually read the 480?
I only ask because:
"1.7 The benefits code applies to:
Section 67(1) (a) directors and certain other persons in controlling positions whatever their remuneration"
From first principles I'm going to say yes.
If the owner/manager reimburses himself £10,000 of expenses - even if he can s336 claim them all on his TR - then that's £10K of income. If there is no dispensation in place then that's 10K.
Which is probably what s67(1)(a) is saying.
That said, no penalty for late filing / non filing if no class1A due?
Peter, your clever comment recently about saying no the were due on ALL P35s might help although I am not sure of HMRC mechanics, ie if there was one filed in 2010/11 I don't know whether HMRC will automatically expect one now.
I'm being lazy
If you have read 480 so comprehensively could you please let know where it indicates that P11Ds are not required when there is not an employers scheme in place?
I didn't read 480 comprehensively - I didn't get past 1.7. Perhaps you'd be good enough to direct us to the relevant provision, and I can comment further.
That was my question
if there is no employers scheme why is a P11D not required?
Where is the authority that says no P11D is required if there is no employers scheme?
Whilst we're on the subject of apparent anomalies, why does the 480 (16.7) say that excess mileage payments must be reported on forms P11D and P9D (my emphasis) whereas HMRC's guidance on their website states that no reporting is required where such payments are made to employees earning less than £8.5k (ie P9D employees)?
You're not making much sense
Guidance (and legislation) is clear - if you provide any benefits or pay expenses to/for directors then (with certain exceptions) you are required to submit forms P11D. You have stated that there is no requirement to file P11Ds where there is no employer scheme - where is the authority to support that statement?
The anwser is.....
Hi all posters on this subject,
The lack of a PAYE scheme/reference is irrelevant - that's just an HMRC admin issue. Actually when I worked for them we had schemes called "type 8s", so called "director only" schemes. These were set up where the company had no paid workers and so you had a situation like Peter describes. I doubt HMRC have done away with these although they may have changed the name and the way they administer them.
Although it's a useful guide forget the 480 it doesn't have the force of law. The bottom line is there is an obligation to submit P11Ds where benefits or expenses not covered by a dispensation or PSA are provided to directors. If none are provided there's no obligation. I'm sure I could dig out the PAYE reg that deals with "special returns" - but I don't have the time right now.
That is correct
This means that you don't need a PAYE scheme if you only have payments under the LEL but you do need a PAYE scheme if a director gets reimbursed for one bus journey!
The rules have always been different for directors, primarily to avoid abuse. Otherwise there would be nothing to prevent a company paying its sole director nothing in cash, but remunerating him with all kinds of valuable benefits, including non-cash assets that could easily be converted into cash. The requirement to submit P11Ds for directors, existing PAYE scheme or not, prevents that kind of abuse, whilst necessarily catching the 'innocent' situations per your example.
I don't share your doubts about Tony's comments. When I said they were conclusive, I was merely referring to his comment about P11ds being required in all cases - PAYE scheme or not.
One word
Wouldn't it be more efficient if P11Ds were only required if benefits were paid to employees/directors and not also for certain reimbursed business expenses as now?
"Dispensation"
?
Whether there is a dispensation or not there's not much difference to the work required.
You ain't doin' it right if that's the case
Hopefully, people will soon realise that a dispensation provides very little practical benefit.
I disagree 100%
Imformation
How do you obtain the information to submit P11Ds?
Easy - I ask the client for it. Sometimes it arrives by email, sometimes by fax, sometimes by post. That is how I obtain it.
Back foot?
Not at all
The answer is of course (c) - something else. I'm not going to divulge here exactly what I say to clients, but it's broadly a request for details of items not covered by the dispensation (the client is reminded each year as to what is covered by the dispensation).
I know what's coming next, but I'll let you ask anyway .....
Simples
I wouldn't be comfortable with making a similar request to my clients. You are relying on your clients having a level of knowledge that, in my opinion, the vast majority of clients do not possess. You seem to be passing the buck.
In your opinion - or your experience?
Actually, I'm quite comfortable with the level of knowledge that my clients have. Whether that's because I've educated them sufficiently well, or they're just generally of a higher quality I don't know. But you're dead right - I'm passing the buck. I'd much rather not be doing P11Ds, even with a dispensation they're a time-consuming pain in the backside. Our clients are left in no doubt that all responsibility for providing us with all relevant information, and checking the accuracy of the forms, rests with them.
I dread to think how you get the information to prepare statutory accounts: "What's the turnover?", "What's the bank interest payable?", "What's the depreciation?"
That's easy to answer as well - I don't prepare statutory accounts. But it's a rather odd comparison - to liken the preparation of accounts with a form-filling exercise.
By your analysis
If you want to ensure that your clients' P11Ds are 100% complete and accurate you will need to carry out a full Employer Compliance Review of all their records every year. If you have the time and inclination to do that, all well and good. I prefer to simply tell my clients what information I need for the returns. As I say, I've either explained myself sufficiently well, or my clients are sufficiently intelligent to understand the instruction. Your practice and/or clients may differ, and therefore require a different approach.
I have seen many ECRs over the years, with quite a few adjustments but only once can I recall having seen an adjustment in respect of P11Ds where we have prepared the forms.
This discussion has pretty much come to an end - we'll simply need to agree to disagree on our respective approaches to form-filling exercises.
That makes no sense at all
I've sent an email to the OTS recommending that that HMRC only require P11Ds to be submitted in the case of an employee/director receiving taxable benefits or round sum expenses greater than the HMRC allowances.
At the moment, the only things you need to report on P11Ds are taxable benefits and round sum expenses in excess of HMRC allowances. So what do you expect your email to achieve?
And how ...
... do you propose ensuring that your client has done nothing more than reimburse expenses etc, thereby avoiding the need to file P11Ds? The checks required would be little different to those required to ensure that a dispensation is complied with.
Yes, accounts info can be a useful source of infomation for P11Ds, as can info obtained when preparing CT600s. But we're clearly working with different client bases. Our firm certainly doesn't need details of evey transaction in order to prepare a set of accounts. Even if we did, unless every one (or the vast majority) of your employer clients has a 5 April year end, and you're able have the accounts finalised by 5 July, you will not be able to use the accounting records to complete the P11Ds.
.
The vast majority of my clients have a year end of 31 March
As i suspected, our client bases are quite different
What size firm did you train with?
Irrelevant
How come you don't prepare statutory accounts?
Because all I handle is tax - there are others in the firm that have the dubious pleasure of preparing accounts.
@ Peter
What do you think the relevance is?
For what its worth, I find myself agreeing with both BKD and yourself!
I have made assumptions in the past based on my knowledge of the client and their books, speed, simplicity, risk etc.
This year I decided to be far more collaborative because I felt it was right for the client to be more directly involved in the process and also to cover my backside. It seems it was a bad decision because I am getting too much feedback along the lines of, 'why have you made it more complicated this year, have you been doing it wrong all this time, are you trying to get more money out of me for something I don't need, etc'
I guess, the answer is to have a system based on your own practice culture, attitude to risk and the balance between compliance and the cost of it. And then stick to it.
Certainly, clients seem to be suspicious of change.
.
Accusations
I've seen plenty of accountants write a letter with queries on and expect the clients to provide answers even though it's obvious the clients don't know what time of day it is. As long as the accountant has not seen any evidence of the information being wrong they accept it. They keep their eyes firmly shut at every stage of the process. The funny thing is that these are accountants who pretend they have an intelligent client base when in fact they don't care what is churned out.
If those comments are directed at me and my firm, I suggest that you retract them pretty swiftly. If they're not, then I would simply suggest that you avoid making sweeping generalisations.
Never Mind Directors
The whole idea of spending hours calculating reimbursable expenses for any employee, putting them on a P11D (where no dispensation is in place) and the employee reclaiming the self same amount either on their tax return or by a phone call to HMRC is ridiculous.
Dispensations are admittedly easier to get these days but there was a time when one man band companies couldn't get them because of HMRC paranoia about a lack of oversight.
As far as the law is concerned I'm pretty sure that, if expenses are paid, a scheme must be set up in order that P11Ds can be submitted.
I do know that some taxpayers (invariably unrepresented) end up with their code number reflecting these genuine expenses and never get around to reclaiming the expenses - I suspect this is why HMRC are keen to keep the status quo.
I don't know whether the OTS have visited this subject but this might redeem themselves in my eyes after their pathetic efforts with IR35.
You've answered your own point
The whole idea of spending hours calculating reimbursable expenses for any employee, putting them on a P11D (where no dispensation is in place) and the employee reclaiming the self same amount either on their tax return or by a phone call to HMRC is ridiculous.
Put a dispensation in place. As you say, it's a straightforward exercise.
Procedures
You'll still have to do 90% of the work anyway in case there are expenses not covered by the dispensation - unless you rely on your client doing the work!
Yes I am relying on the client to provide me with details of expenses not covered by dispensation. Just because you are unable to trust your clients with such a simple exercise doesn't mean that the rest of us don't trust our clients. Once the client knows which expenses are covered by the dispensation, it's a relatively straightforward exercise to keep track of them (and, conversely, those expenses not covered). Each to their own - you do things your way, others will do things theirs. I have so far resisted from commenting on your practices, but since you have refused to retract your insinuations above - one look at your website confirms every suspicion I have about you.
Missed the point
If you do know and if it's so simple to tell clients, can you say here what expenses need to be included on a P11D if there is not a dispensation?
No - because it depends on each client's circumstances. What's relevant are the expenses that are covered by the particular dispensation. Once the client knows what is covered, he can keep track of them and exclude them when reporting. You really are making it seem much more complicated than it is.
Casting doubts
Which is exactly why I refuse to answer your petty insinuations.
But in answer to one of your points:
Yes, my clients are told which expenses that are not covered by a dispensation are reportable.
You can take my refusal to argue your other quesitons as a lack of knowledge if you wish - don't make the mistake of confusing me with someone that gives a s.....
As for your questions about my own capability - well, they'll also go unanswered because you've obviously made up your own mind. Your comments I find quite insulting but at the sme time - based on the quality of your website - laughable.
I don't believe that my clients are in any way superior. But you stated above that the majority of your clients use Excel. Nothing wrong with that, but it demonstrates that your client base and mine are quite different.
If you feel that you need to examine every one of your clients' transactions to ensure that P11Ds are correctly completed, then that is your choice. As Andy said above, it's all about risk analysis. With that in mind, and the instructions given to my clients, I'm quite happy that my clients' P11ds bear scrutiny (as evidenced by my above comment regarding the outcome of numerous ECRs).
Just so you know, and much as you hate folk that say this, this is my last contribution to a thread that is turning into the usual weekend slanging match. You're welcome to have the last word. (Though if it's an insult, it will be reported)