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)
Please login or register to join the discussion.
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.
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.
I am well aware of that - that is why I referred to the employee paying it, rather than to the employer collecting payment.
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.....
If that's what the employee agrees to of course the original sale can, and indeed must, be reversed.
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.
Yes. With the benefit of hindsight, the employer is realising that they bought the goods to provide to an employee as an employment perk.
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.
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.