P11D Reimbursement of Expenses

P11D Reimbursement of Expenses

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No dispensation in place.

Employee pays for business expenses using his own credit card. Employer reimburses him the cost. My understanding is that in the absence of a Dispensation Notice, there is a reporting obligation. But this paragraph in Booklet 480 seems to contradict that;

"Businesses are often run in such a way that employees make payments on their employer’s behalf. For example, an employee may buy stamps, stationery and items of equipment for the employer and be reimbursed the costs incurred from petty cash or by cheque. Such transactions are not providing the employee with either earnings or expenses because the employee has received no money of his own. Accordingly such reimbursements do not feature on the P11D."

Does this mean there is no reporting obligation or is the nature of the business expense relevant here?

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By DMGbus
19th Mar 2015 14:42

HMRC guidance 490

490
Chapter 9
page 50 of 76
Para 9.3 has a useful phrase...
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General rule
9.1
An employer reimbursing or paying an employee’s travel expenses or who pays directly for an employee’s travel should:
• report details of the payments to us on form P11D by 6 July after the end of the tax year, and
• provide the employee with the details, or a copy of the P11D report, also by 6 July after the end of the tax year, and
• report details of Class 1A NICs on form P11D(b).
References here and elsewhere to form P11D apply equally to equivalent returns, including returns in an alternative format agreed with us.
9.2
For employees paid at a rate of £8,500 a year or more, employers must also report the cash equivalent of any benefit including travel benefits – for example, the provision of overnight accommodation or other travel facilities.
Exceptions to the general rule
9.3
Details do not have to be reported on form P11D if the payments:
• are not taxable

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By EstherG
19th Mar 2015 16:02

I have been looking at this today too.  My understanding is that if the employee buys things on behalf of the business (such as stationery / stamps etc) then it does not need to be included in a P11D. 

I believe that the dispensation relates to travel, subsistence, phone bills & entertainment so in the absence of a dispensation, these are the things that should be on the P11D, regardless of whether they were paid for by the employee or the employer (along with the usual benefits in kind).

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By Wall1690
19th Mar 2015 16:15

Yeah - that's my understanding too - but I don't think the 480 booklet makes it very clear. It's the line about the employee receiving no money of his own that confuses me. Surely the same principle applies to any reimbursement that does no more than reimburse the costs you've incurred on business expenses, whatever they may be?

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By mikeyban
19th Mar 2015 21:45

In reality my experience that most accountants ignore expenses that are clearly business... This is not strictly correct of course and a dispensation is sensible but this is my experience!

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By JimH
19th Mar 2015 23:04

Feeling more relaxed now rules on P11D reporting of reimbursed
rules on reimbursed business travel expenses are changing.

Whilst there is currently an obligation to report certain expenses, but not office stationery, there's a general feeling on AWeb that HMRC ain't going to pursue unreported reimbursed business travel. Funnily enough, I've received no response to dispensation applications this year, whereas they came through fine in previous years.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/fil...

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By BMary83
07th Apr 2015 11:02

Missed expenses

Also, I often find that a client will tell me they haven't paid any expenses to employees (or themselves being the director) only to find the opposite is true when preparing the accounts.  Given there is no advantage to the employee as they are only being reimbursed by the employer, what is typical stance of HMRC in relation to penalties?

 

I read an older thread here where one comment suggested HMRC have never pursued a employer for penalties where there was no tax loss to them.

 

 

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