Dispensation for single person company?

Dispensation for single person company?

Didn't find your answer?

Looking at HMRC guidance, it looks like they will accept dispensation applications for some one man bands.

The co concerned is a sole director company, with no other employees. Sole director is 90% shareholder with spouse being co sec and having remaining 10%.

The expenses I want to cover are proper receipted purchases and purely business expenses, such as a separate business phone line which is paid along with the personal phone account as it is cheaper (although separately itemised on bill), stationary, mileage based on business mileage log at FPCS rates, personal professional subscriptions necessary for job. Nothing in essence controversial, but will they really accept it if there is not an independent 'authorisation' of the expense claim?

The other possibility is that the co.sec, who is not an employee nor a director, but is a 10% shareholder, could authorise all claims. Would that be acceptable?

Any advice please?

Replies (6)

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By Richardrussell
02nd Feb 2007 11:13

Rebecca
Thank you for that, I am now armed with "in the spirit of..." ammunition.

Also noticed the new style P46, which I did not know about.

Do you have any experience of the new style P11DX's?

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Rebecca Benneyworth profile image
By Rebecca Benneyworth
03rd Jan 2007 21:42

But some of your items don't count
Quite a bit of the stuff you have listed will drop out in any event.

Firstly, payments for goods and services on behalf of the employer are not reportable on P11D. See booklet 480 page 10 of the 2006 version under the heading "Purchases on employer's behalf". This should exclude some of your items.

Secondly, provided the mileage reimbursements are at AMAP's rates (the scheme that replaced FPCS) and mileage is documented then none of that needs to be reported.

My only query would be over the professional subscription. This may in the event be taxable - you would need to check whether it is on the HMRC approved list.

Reviewing your list again, I think that about covers it, but on a general point, HMRC did emphasise this summer that much wider availability of dispensations would be used to reduce the burdens on business (see their report issued at Budget 2006 time) and particularly smaller businesses. If this is true, these types of companies would be an obvious candidate. If you don't ask, you won't get!

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By djw090
03rd Jan 2007 09:56

They may not grant it
HMRC's approach to these things moves over time as they try to eliminate items they have to process.

However, the last time I looked into it there needed to be an internal approval system and whilest they would grant a dispensation in an owner managed business the dispensation normally excluded the owner manager.

By the way IIRC amounts paid under FPCS are not reportable on the P11D.

David

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By Phil Barbasiewicz
02nd Feb 2007 16:37

Richard
In practice I have found that some tax offices like Local Compliance NW & Midlands (prev. Chapel Wharf Area Compliance) will issue a dispensation notice off the back of receiving a completed P11DX.

Other tax offices (like Berkshire Area Compliance) will not. Upon receiving a P11DX they will issue a standard questionnaire to be completed and filed along with a copy expense claim form. The questionnaire itself is not at all complex and should not take more than 10 minutes to complete if you have all the information to hand.

If you know the tax office falls under the latter category then you can save time by filing a completed questionnaire alone - I would give the tax office concerned a call to check what their policy is if you are unsure and get a copy of the questionnaire if necessary.

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Rebecca Benneyworth profile image
By Rebecca Benneyworth
02nd Feb 2007 09:29

HMRC document
Hi
Here is the detail of HMRC's comment on P11D's. It comes from a rather grandly titled document called "Progress towards a new relationship : How HMRC is making life easier for business". (http://www.hmrc.gov.uk/budget2006/new-relationship.pdf ). This was a short summary of the KPMG study on tax compliance costs but included some very specific intentions.

At para 2.17 it said :
"Consistent with previous feedback, business also said that they found it time-consuming and difficult to complete form P11D, ...... HMRC believes that a significant number of these forms would not be necessary if more employers applied for a dispensation. This would help employers who reimburse business travel and other costs borne by the employee, which without a dispensation need to be reported on a P11D and then claimed as allowable for tax by the employee. Up to now HMRC has made employers aware of dispensations through a general message. In future we will target guidance towards those employers most likely to benefit on the basis of their past entries on the form."
Not much action on this front yet, but this is what prompted my comment.

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By Richardrussell
01st Feb 2007 11:09

Rebecca
Do you have a link for the report you mention, issued by HMRC circa Budget 2006?

Thanks

EDIT

Also, has anyone any experience of the new P11DX's? Do you submit on their own (as they are more comprehensive than the older ones) or do you include a copy of the expense form and notes about how expenses are handled?

Or is it down to the individual tax office 'lottery'?

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