P11D practical issues and pointers
SWATuk’s Kathryn Jones provides some practical tips on processing P11Ds including how to deal with directors' loan accounts, cars, national insurance, expenses and dispensations, and filing payments and penalties.
P11D season is with us once again and accountants are likely to be inundated with significant amounts of information that needs to be processed within a very short time frame.
P11Ds need to be completed and submitted to HMRC by 6 July 2010. By this date the employer must also provide current employees with details of the information contained on the P11D. This can be provided as a photocopy or print out of the submitted P11D. Alternatively it can also be provided in the form of a letter or schedule, which is often the format adopted by larger employers with automated benefit recording systems.
Obtaining the information to complete the form P11D can be difficult. Often the firm will have prepared annual accounts to a date part way through the tax year and so detailed information should be available up the accounts date. It is worthwhile making sure that accounts preparation staff are sufficiently familiar with the benefit and expenses rules to identify and record relevant items during the accounts preparation process. However this inevitably leaves a period of the tax year for which no information has yet been received. It is imperative that the client is asked the right questions to ensure that all the necessary information is provided for preparation of the P11Ds. Many firms will use a letter with standard wording to request this information.
There are many types of expense or benefit that need to be reported on Form P11D and HM Revenue and Custom’s A-Z Guide can be a useful resource in determining what needs to be reported and how.
Additionally, HMRC has produced a ‘P11D Quality Standard’ that must be adhered to when submitting P11Ds or alternative returns of benefits in list format. It also sets out a number of other errors to watch out for. Some of the more contentious issues are discussed below.