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5 year check on dispensations
I have several clients who I applied for dispensation some 15 years ago, which means we have just gone through the second review and believe me, these come us as regular as clockwork.
The amusing thing is, although HMRC accepted my renewal letters, they responded direct to the Client because they said they did not have the required authorisation to deal with me, even though I am authorised to submit the Clients payroll returns online (and do) and they accepted my letters five years ago and responded to me.
A telephone call discovered that apparently this department cannot access the main system which is why they could not deal with me directly. When I asked what I could do to correct this they initially said to complete a 64-8, when I said, obviously, this has been completed and submitted because otherwise I would not be able to submit payroll returns online, they didn't have an answer.
Yet another HMRC lack of joined up systems!
P11D and Life Insurance
If you have clients that are currently getting a P11D charge for life insurance that is being paid for by the company then help them out. The new relevant life policy can be paid for by the company for personal life insurance and used as a legitimate business expense.
Still unclear on expenses
I have several "one man band" Ltd Cos and I always urge them to pay for everything via the company debit or credit cards and to avoid using their own cash and being "reimbursed".
But I still am not sure if, having done this, we still have to report the travel & subsistence, entertaining etc they have incurred whilst on business on a P11D ? (and subsequently claim for those expenses on the tax return) even though they have never had the cash pass through their hands.
I also have a company where odd bits of stationery are purchased with their own cash and then reimbursed, and the mobile phone bills are in their personal names and the company reimburses them for those. Do these have to be reported ? (we have always done so).
I hate P11D's.
Expenses
I hate P11Ds too, but I imagine that we are all going to loathe RTI a lot more.
The whole system of needing a dispensation in respect of expenses incurred "wholly, necessarily and exclusively" is potty - if only MPs had to do this, they might work out what a time waster this is and be interested in changing the law.
Rant over
Barkster -
f you do not have a dispensation in place (which you can apply for with a one man company as it goes, just ensure that you have an agreement with your accountants that they will do a double check of expense claims from time to time to verify that you are doing what you should be doing), you will need to report expenses paid on behalf of employees.
If you have an employee using an employer credit card then the company is paying expenses and you need to report them. You don't need to report purchases of stationery etc see s316 ITEPA 2003 as there is no tax charge for the provision of work accommodation, services and supplies. Ensure no private use of an employer's card.
If you are paying an employee's mobile phone bill then that is a different story as the payment is on account of a pecuniary liability of the employee, the payment is taxable as earnings s62 ITEPA 2003 - you should gross that up via the payroll. To unravel the consequemces of failing to apply PAYE it might be easier to get the employee to reimburse the employer and then have the employee submit a claim based on actual phone calls.
Virtual Tax Support for acccountants and advisers: www.rossmartin.co.uk
P11d
I cannot seem to get a straight answer to this - I am obviously missing the point. An employee pays for a rail ticket himself for a business trip and claims via petty cash. If this is reported on the P11d online, then Class 1A is automatically calculated even though it is a genuine business expense.
The employee would then enter it as a business expense on his tax return to avoid BIK tax. What happens if, apart from this item, he has no need to do a return?
Should not be any Class 1A
What software are you using? If you do a paper P11D you would enter this expense payment at Section N.
Recommend that you apply for a dispensation for 2012/13!
Class 1A
Thank you for your reply Nichola - yes, I will apply for a dispensation. However, am still curious as to how the system works ie the online submission forms of HMRC's own software does this automatic calculation. This is fine if the expense is a true BIK but there is no facility for handling genuine re-imbursements. Surely I cannot be the only person in the universe to have come across this?