P11D for ex employee

P11D for ex employee

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A client has received a P11D from a former employer.  She did not work for that employer during 2015-16 but received private medical cover.  It is her ex-husband's company and he seems happy to still pay the bill.

I do not believe that she should have received the P11D.  However I also do not believe the amount should be taxed on the ex since they are not related parties.  Even if she was an employee this is not a taxable benefit unless earning >£8,500 or a Director.

I do not want to kick up a stink and find he then withdraws the insurance or it causes a rift between the exes.  The P11D benefit falls within her personal allowance.

So should I just use the figure even though I do not agree with the treatment (having raised this with my client first)?  

Replies (6)

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RLI
By lionofludesch
24th Jul 2016 20:24

Surely it's not your decision.

You must put your views to the client and ask her what action she wishes you to take.

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By Portia Nina Levin
25th Jul 2016 12:03

The P11D is not binding on the recipient. She can complete her tax return (if she has one to complete) and just not use the figure. Why does it matter if the amount is not taxable anyway? Does she need to complete a tax return even?

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By Matrix
26th Jul 2016 22:26

If the P11D has been submitted then I assume HMRC will expect this amount to be included in any tax return.

She is a sole trader and I have already submitted her tax return. I would have to amend and charge a small fee. The figures have also already been used on the tax credit form.

My concern is that next year her profits may exceed her personal allowance and so the benefit would generate a tax charge. I do not agree that this is a benefit but I am sure she is happy to continue to receive the medical insurance. (Will discuss with her, I said this in my OP.)

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Replying to fawltybasil2575:
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By Matrix
26th Jul 2016 23:52

Thanks Basil. So do you agree that technically there is no benefit for my client?

I could issue the letter but, again, I would have to charge.

Or I could ask her ex-husband's accountants to refile their P11Db. They are well aware of the divorce and tried to change the date she transferred her shares back to him last year to reduce his tax retrospectively so I am not a big fan.

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By SteveHa
27th Jul 2016 08:53
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By Matrix
29th Jul 2016 09:46

I spoke to the HMRC technical team and they have confirmed that the benefit is not taxable on her since she is an ex employee and the P11D should not have been issued. They believe that it should be taxable on him since if there was no connection then the benefit would not have been paid.

They suggested amending the tax return with a white space entry with the technical team's response and asking the company to withdraw the P11D.

I have left the client to decide if she goes back to her ex-husband's accountants with HMRC's view.

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