Hi all,
A client of ours confirmed that they have a mobile phone of which the majority of he cost was in relation to business use. The bill is in their name.
I understand that the business element should have gone on to a P11D with a corresponding expense claim, however the P11D has obviously passed.
We are only talking a few hundred pounds and the tax is neutral. The accounts for 30th April are now being finalised and we want to credit the directors account with the business element.
Shall we just set up a dispensation now (if this is possible?) or to claim do we need to submit nil p11d's.
Thanks,
Replies (18)
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It would only go on a P11D if the company paid it, but from what you say the director paid it himself.
That's fine. Nothing to stop you ding so. Obviously client should be able to justify the apportionment if challenged.
Yes it should have gone on a P11D but there are members who believe that, since the reimbursed expenses rules will be changing, that this is not currently necessary.
Your client can only claim the business element if it is clearly identifiable. If there is a monthly fixed call package then nothing can be claimed. The contract should be changed into the company's name in which case the whole bill can be claimed with no BIK implications.
Gone on a P11D?
Surely not until the year in which the reimbursement is claimed - which is 2015/2016.
The OP said "I understand
The OP said "I understand that the business element should have gone on to a P11D with a corresponding expense claim, however the P11D has obviously passed." so I had assumed some of the claim related to 2014/15.
P11D
The OP said "I understand that the business element should have gone on to a P11D with a corresponding expense claim, however the P11D has obviously passed." so I had assumed some of the claim related to 2014/15.
Yes we are indeed told that some of the claim relates to 2014/2015, but we are also clearly told that no claim was made or recognised until 2015/2016. Is it not the year of reimbursement that determines which P11D it goes on?
As the matrix says, be careful
You can identify the business calls and claim them. You can't, however, split the tariff charge between business and personal use.
SOLUTION - tell him to get a company registered mobile phone then he can claim 100% of the costs, no matter the split between business and personal use.
PAYE
Not sure it is a P11D matter. If the company is settling the pecuniary liability of an employee, with phone contract in employee name, I think it a PAYE payroll matter rather than P11D.
It isn't settling his pecuniary liability. The question makes no sense unless the director has already paid the bills himself (there would be nothing for him to be reimbursed for otherwise).
The question is about the company reimbursing the director for the cost of business calls he has incurred personally.
Yes but from what you say his expenditure pre-dates 30 April 2015 but the company's (i.e. its reimbursement to him) does not - indeed as of 24 August 2015 it has not yet occurred?
So I would just make the entry and worry about the P11D treatment, if any, in May / June 2016.
2015/2016
But if we credit this expenditure to his directors account in the April 2015 year end, would that not constitute reimbursement?
Yes but it would be reimbursement in 2015/2016 wouldn't it?
There is more than one way to skin the cat, but whichever way you do it it's a 2015/2016 P11D matter, if it's a P11D matter at all.
Not...
... if some time after 5 April 2015, but before 1 May 2015, the director and the company had actually agreed that the expenditure should be reimbursed in that manner, and an adjustment to the loan account was then made contemporaneously.
In that situation, it would fall within 2015/16 and be reportable on next year's P11D as John says. If there's a corresponding expense claim you might choose simply not to report it, and I doubt that there would be any comeback from HMRC.
Or do it another way. Director submits his claim now, and is reimbursed today (by cash or credit to DLA as he and the company decide). Company then accrues the expense in its 2015 accounts.