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P11d's & S.336 claims

P11d's & S.336 claims

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I have a Ltd Co client with two employees who have to stay away for work reasons. The hotel bills are contracted directly with the company and paid in advance by the company.

I think I still have to put these expense items on a P11D, don't I ?

They don't do tax returns so will need to do a s336 claim to make sure these expenses don't get taken off their tax code, but I can't find a form for this. Is there one somewhere ?

[It's a P87 - just found it !]

Also, other posts suggest that attaching the P87's to the P11D's stops them changing the tax code, but how do you get on with that when the P11D is being filed electronically ?

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JCACE
By jcace
01st Jul 2013 12:33

Why P11D?

Why report on P11D? What benefit is arising? Or what expense is being paid to the employee? If the company contracts with the hotel, and pays the hotel, then the employee won't have a s.336 claim, as he/she won't have incurred an expense as far as I can make out from the information as stated.

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Replying to lionofludesch:
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By sparkler
01st Jul 2013 12:57

hotel accommodation requires a P11D depending on earnings

jcace wrote:

Why report on P11D? What benefit is arising? Or what expense is being paid to the employee? If the company contracts with the hotel, and pays the hotel, then the employee won't have a s.336 claim, as he/she won't have incurred an expense as far as I can make out from the information as stated.

Whether a P11D is needed depends upon whether the employee earns more than £8500 per year or is a director.  If this is the case, a P11D is needed, if the employer "provides, pays for or reimburses the cost of business travel".  See http://www.hmrc.gov.uk/payerti/exb/a-z/t/travel.htm#1

In the above link, the important paragraph to note is the following:

The 'necessary costs of business travel' also include:

subsistence costs, such as mealsaccommodation if the travel requires an overnight stay

It is irrelevant whether the employee pays or the employer pays - even though there is no expense incurred by the employee, the cost of business travel must still go on the P11D.  I would recommend applying for a dispensation so that a P11D is not required in future.

 

If the employee is not a director or earns less than £8500 per year, then there is no such reporting requirement.

 

I am not aware of a form for an S336 claim, and have always written directly to the tax office in such situations. However, the usual result is that the S336 claim is ignored and the tax code is changed in any case. 

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By DMGbus
02nd Jul 2013 08:36

Not reportable if not taxable (per official guidance)

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

OR • are covered by a dispensation (see paragraphs 10.1 to 10.9)
OR • are included in a PAYE Settlement Agreement (PSA) (see paragraphs 10.10
to 10.12).
The rules for reporting mileage expenses payments made to employees using their own
vehicle for work are different to the general rules on reporting payments.
See paragraph 9.13

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By BKD
01st Jul 2013 20:19

But....

... hotel and travel costs are taxable, so need to go on the return.

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By tonycourt
01st Jul 2013 22:58

Just in case....

...you want a second opinion - BKD's succinct reply is correct.

In my experience benefits or expenses for employee travel don't USUALLY find their way into tax codes off the back a P11D. But I suggest the employees submit an expenses claim in the form of a P87 or a simple letter claiming the expenses (I think the latter works more efficiently). 

In future, as already mentioned by others, a dispensation would save time and effort all round and  it’s unlikely HMRC could refuse one in the circumstances you describe.

 

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By DMGbus
02nd Jul 2013 08:37

s336 claims address

For those who put not taxable travel expenses on P11D the way to ensure that they don't get taxed is to send a s336 claim to the address stated on the following webpage:

 

http://www.hmrc.gov.uk/news/p11d-s336.htm

http://www.hmrc.gov.uk/news/p11d-s336.htm

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By DMGbus
02nd Jul 2013 08:34

Travel expenses that are not taxable

9.3 Details do not have to be reported on form P11D if the payments:
• are not taxable

The above is under the general heading about reporting travel expenses.

There's no specified difference for hotel expenses.

If the expenses qualify for a s336 claim then they are by definition not taxable.

If they are not taxable they don't need to be reported as stated in para 9.3.

Reporting on a P11D then submitting a s336 claim does not alter the nature of the expenses.  Not taxable = don't report.  This is under the general guidance heading of travel expenses (para 9.1 of guidance).
 

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Replying to 356B:
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By BKD
02nd Jul 2013 09:49

Wrong definition

DMGbus wrote:

If the expenses qualify for a s336 claim then they are by definition not taxable. 

The expenses are taxable. They are removed from the charge to tax only if the employee makes a claim. If for whatever reason no claim is made then the benefit remains within the charge. Put it another way - how does the employer, completing the P11Ds, know that the employee will file a s336 etc claim? (In most cases, of course, they will be prepared together but that doesn't change the underlying principle.) If no s336 claim is made (even though the expense is eligible), the amount is chargeable - so let me ask you, how would you report such an expense if you are not going to put it on the P11D?

Likewise, professional subscriptions that are not covered by a dispensation are reportable. They may or may not be eligible for a s336 claim - that doesn't alter the fact that the benefit is in the first instance taxable. A s336 claim does not exempt a particular item from tax, it works by deducting the allowable amount - usually, but not always, 100% - from the taxable amount.

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By Ding Dong
02nd Jul 2013 08:55

I might start not reporting then.....

I have always in the past reported expenses and claimed on a s336 the expenses re-imbursed (where we have not had a dispensation) HOWEVER where the client is lax/late or refuses to pay for this service we have not done and issued the client a friendly notice saying, they should be OK not reporting but technically they should report and do risk a penalty.

However, reading DMGbus' posts I am of a mind to go with non reporting and non s336. If the forms are then deemed incorrect/incomplete section 9.3 as stated above will be used as a "defence" on the grounds the expenses are not taxable. 

I am sure any "reasonable" HMRC inspector (and most are) would see there is no loss of tax (yes maybe a penalty but I very much doubt it would be enforced) and would accept interpretation of the wording a 9.3 as mentioned.

It would be interesting to know if ANYONE on this site has ever had a P11d penalty issued to one of their clients for non disclosure of re-imbursed expenses. in 20 (I think) years of doing P11ds and many client paye inspections I have never seen one issued.

 

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