P11d benefit for goods sold to an employee

Value of goods sold to an employee and what to do with balance owing on his account

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My client sold goods to one of their employees. So the entry made was debit employee account and credit sales. The amount has not been paid. My client will now show show the value of goods sold on his P11d form as a cash benefit.

The question is what happens to the balance outstanding on the employee's account.

 

Replies (14)

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By johngroganjga
22nd Jun 2017 15:32

Unless the goods were sold at undervalue why would there by anything to report on a P11D?

What normally happens to an outstanding debtor balance is that the debtor pays it, especially if he is an employee who can pay it out of deductions from his wages.

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Replying to johngroganjga:
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By Portia Nina Levin
22nd Jun 2017 15:38

Employers cannot deduct money from an employee's wages/salary willy-nilly John. They do need the employee's authority, even if it is an amount owed to the employer. ERA 1996, s 13.

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Replying to Portia Nina Levin:
By johngroganjga
22nd Jun 2017 15:59

I am well aware of that - that is why I referred to the employee paying it, rather than to the employer collecting payment.

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Replying to Portia Nina Levin:
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By Portia Nina Levin
22nd Jun 2017 17:01

So w1lly is censored? You've got to be fuc4ing kidding me!

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Replying to Portia Nina Levin:
By Democratus
23rd Jun 2017 11:11

My Grandfather was a Willy, my father has a Willy in his name, mine when anglicised is a Willy....what's wrong with that.

[Edit] I had hoped that capitailsing the first letter making it a proper noun might have worked. Alas not and it looks like i come from a long line of censored.....

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Replying to johngroganjga:
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By gillpeer
22nd Jun 2017 16:08

Thank you for your response.
What the client wishes to do is not treat it as a sale, instead treat as as the benefit-in-kind.
On this basis, can the original sale be reversed and the cost of goods sold put on the employee's P11d form as per the following link?

https://www.accountingweb.co.uk/comment/601881#comment-601881

Thanks.

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Replying to gillpeer:
By johngroganjga
22nd Jun 2017 16:21

If that's what the employee agrees to of course the original sale can, and indeed must, be reversed.

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By Portia Nina Levin
22nd Jun 2017 15:40

If it is going on the P11D, only the cost amount goes on. There is only a benefit to the extent that the employee pays less than cost. ITEPA 2003, s 204.

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Replying to Portia Nina Levin:
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By gillpeer
22nd Jun 2017 16:28

Thanks.
Does that mean it doesn't get recorded in the company's books as a sale and if it is recorded as a sale, then it has to be reversed out.

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Replying to gillpeer:
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By Portia Nina Levin
22nd Jun 2017 17:02

Yes. With the benefit of hindsight, the employer is realising that they bought the goods to provide to an employee as an employment perk.

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Replying to Portia Nina Levin:
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By Euan MacLennan
22nd Jun 2017 17:11

So, it's OK to re-write history?

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Replying to Euan MacLennan:
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By Portia Nina Levin
23rd Jun 2017 10:29

Well if history has turned out to be wrong, what else can you do? Some days Oceania are winning the war, and some days they aren't.

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By Dib
23rd Jun 2017 14:12

I thought that Oceania were our allies?

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By Ruddles
23rd Jun 2017 15:45

If there was an actual sale, as evidenced by the issue of a sales invoice for instance, my suggestion would be simply to write off the debt and tax/NI the employee accordingly - rather than waste time looking for a time-machine. This may involve more tax payable than had the asset simply been transferred and assessed at cost, but it's still better than having to fork out for the sale price.

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