P11Ds for small companies

P11Ds for small companies

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Client is a small company. One shareholder/director, no other employees.

No benefits are provided, but director does reimburse himself for some expenses. In theory I know a P11D should be done, but director is not keen on spending the time sorting out the information and paying us to do the P11D. There will be no Class 1A and all expenses will be subject to a s.336 claim.

If we don't submit a P11D, HMRC have lost nothing. It seems crazy that the client has to spend time and money on this when there is absolutely no tax/NI at stake. But as this is a one man company, I don't think we can get a dispensation.

If we don't submit the P11D, then I guess the client is in line for a penalty (capped at £100). If I make this clear to the client and they choose not to submit a P11D, where do I stand?
worried

Replies (7)

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Chris Caspell CTA TEP
By ccaspell
18th Apr 2007 20:53

P11D required
I know that it sounds like a sledge-hammer approach as there is no loss of Revenue but you could easily say a similar thing about a loss making business - no tax to pay therefore why do I need to submit accounts?

On a more positive front you ought to be able to get a dispensation - being a small company doesn't deny that but your client needs to demonstrate that he has kept records to show that all the payments reimbursed to him are s336 allowable expenses. Keeping records of expenses paid need not be arduous and the £100 penalty is not the end of it (why do you think that it is capped at £100 incidentally?). Penalties can be charged at up to £300 for each form plus £60 per day if the failure continues; also the monthly penalties of £100 per 50 employees that applies to late P14s and P35s also apply to late P11Ds.

Of course the director could simply sign the form saying that no P11Ds are due, but that would be an incorrect return that you know to be the case...think money laundering reports etc....not nice!

I think that the easiest thing would simply be to tell the client that it is a pain in the [***] but needs to be done - then suggest that either he spends a bit of time sorting out the information or employs your services. Good luck.

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By frauke
19th Apr 2007 09:04

P11d?
Chris in right - get the dispensation - if the record keeping is good it is easy to get.

I will make one point - I see a lot of P11d's completed for expenses which the HMRC have already agreed are not require to go onto a P11d. A couple of years ago, the person doing a PAYE inspection told me that some stationery that the director had paid for, and reimbursed themselves directly from Petty cash should go onto a P11d, I went onto the internet and show him where on the HMRC site it said it was not required to go on a P11d.

Take a look at the guidance on expenses on the employee SA form. There are specific things that must be declared without a dispensation, but there are also things in the manuals which can be used, as reason why they don't on others.

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By User deleted
19th Apr 2007 10:43

What dispensation?
HMRC are a bit funny about dispensations for controlling directors (particularly when they are the only employee), unless there is someone else independant to approve the claims. Therefore I dont think he'll get it.

See http://www.hmrc.gov.uk/manuals/eimanual/EIM30059.htm

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By User deleted
19th Apr 2007 14:46

Lottery

Last year, sent off 5 dispensations, got 2. Main reason for rejection was sole director thing. Also wanted examples of expense sheet.

This year, my usual tax office was 'full', so dispensations got sent to a neighbouring office. Sent off 6, got 4 through, the ones rejected were ones where the payroll scheme had been set up recently. No mention of sole director problem. And all these were on the new form and did not enter into ANY correspondence.

I don't know whether it's the different office or the new form.

However, have had one going on for a year, as the tax office went into great detail. This makes me think it's the office.

I've seen it posted on here before that different offices have different levels of scrutiny.

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By User deleted
19th Apr 2007 15:35

Dispensation?
Can I get a dispensation retrospectively for 2006/07? Even if yes, I am not sure the record keeping is up to it - it is the sort of company where the director will give us a bundle of receipts after the year end and they will be posted to the directors current account, rather than him being specifically reimbursed at the time.

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By User deleted
19th Apr 2007 19:54

Retrospective?
I don't think so. I think they are already generous to say that the dispensations I received in Mar 07 are from 6.4.06.

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By wfewtrell
23rd Apr 2007 14:19

Check out s.316
When we've applied for owner/managed dispensations we've not had too much trouble. It's very easy to create a simple expense claim form and show the client how to use it. That can then be sent to HMRC as evidence if they ask for it.

On a more important note we tend to find that 99.9% of expenses claimed by an owner/manager fall under s.316. In fact there has been more than one occasion when we have queried with an employer's office as to why certain expense types have been left off of their dispensation even though we detailed them on our application only to find that their response is..."...we can't give a dispensation for something which is already excluded from the need to be reported under the legislation". It turns out that this is s.316!! In summary, as long as they are buying something that is necessary for them to be able to carry out their duties...it's excluded. P11D's are now a dream to do!!

Look out for company credit cards though. See page 21 of CWG5 and page 74 of CWG2 and you'll find that most of these can be excluded too!

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