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P11D

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There are multiple costs going through the business on behalf of one of the directors and these get reported on the P11D at the end of the year as benefits in kind.

I have not been too involved in this until now. 

We have recently had a £4k plus VAT invoice in for car repairs on one of his personal vehicles, at present the VAT is being recovered and I am told the net value will be reported on the P11D. The invoice is also made out to the director at his home address.

The general viewpoint is that these ongoing costs are part of the employment package of the director, they are reported on the P11D and therefore are valid business expenses and the VAT is duly recoverable. The amount reported on the P11D would be the value incurred so in this instance £4k.

This seems okay to me albeit I feel the invoices really should be made out to the business in order to recover and may cause an issue.

Appreciate thoughts from those with more knowledge on the subject!

Replies (4)

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By Paul Crowley
23rd Sep 2021 11:30

I would share your concerns
Company is paying the liability of the director, Not really P11D
If p11d then should be for gross not net of VAT
If the director thinks all OK then consider whether to offer to share the discussion with HMRC in writing. If he understands, he will decline.

Bit tricky this as you could start to put a couple of noses out of joint. What does the person doing the P11ds think?
Is the director the business owner?

Thanks (1)
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By DAVY67
23rd Sep 2021 11:58

Thanks for the reply.
It is the majority shareholder.

There are various items that go through annually, I believe it has been done in this manner always so not sure if they have taken advice previously. VAT appears to be recovered and looks like in most instances the net is on the P11D.

I'm yet to discuss with the person who did the P11D's but I will be doing so next time around so I want to get it all clarified!

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By Hugo Fair
23rd Sep 2021 13:33

I'll be happy to bow to alternative views from any of the VAT experts on here.

But I would definitely NOT treat the VAT - "car repairs on one of (director's) personal vehicles" - as an input for the business. How is this different from claiming the VAT on a laptop bought for his daughter, say, irrespective of who pays for it.

Whether the (full) amount should be reported via a P11D or charged to the DLA is an internal matter ... but it is taxable.
From where do you get the idea that because "they are reported on the P11D (they are) therefore valid business expenses"? They are reported on a P11D because the payment is a BiK (a taxable part of the employee's/director's earnings).

Finally ... "the invoices really should be made out to the business in order to recover" is a complete red herring. The supply is to the director not the company, so 'delivery' address is irrelevant.

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By DAVY67
23rd Sep 2021 13:48

Thanks for the reply.

I agree with your views, the paragraph about them being reported on the P11D and being valid business expenses was a comment I have received from colleagues and was the reasoning for the VAT recovery.

Having dug deeper it appears the recovery of VAT is fairly recent, not sure why, but my initial view was the the VAT should not be recovered and the gross value be reported on the P11D the comment above was in response to this.

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