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HMRC nudges taxpayers for missing benefits

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Letters are going out from HMRC to 5,500 wealthy taxpayers asking why P11D data submitted and the benefit-in-kind declaration on their self assessment tax return do not match.

2nd Aug 2022
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HMRC is writing to 5,500 taxpayers and agents asking why P11D data submitted for 2020–21 doesn’t match the benefit-in-kind declaration on their tax return for 2020–21.

Where an employer provides their employee with taxable benefits, they must also report the value of those benefits on form P11D (or online equivalent) to HMRC by 6 July after the end of the tax year in which the benefits were provided. The employer should give the employee a copy of this P11D information also by 6 July after the tax year end.

When the employee is required to submit a tax return under self assessment, they are expected to accurately transcribe the P11D information onto the employment section of their tax return. If the employer and employee are dealt with by the same tax agent, this transfer of data from employer to employee, to tax return, could be an automatic process, assuming the tax software is clever enough to connect the employer and employee.

If the value of the benefits has been payrolled, so it has been taxed through the payroll, there is no requirement to report the benefit information on a P11D. But the class 1A NIC payable on those benefits must be reported to HMRC on the P11D(b).

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Replies (16)

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Ivor Windybottom
By Ivor Windybottom
02nd Aug 2022 16:17

We've had the first of these letters (I assume it is the same programme).

Our client had two P11D's as he had two employments. The Return matches the P11D's and we did the employers' Forms P11D(b), etc. so know everything is correct and reconciles.

We chose to write to HMRC to clarify the position as the call handler could not understand the concept of two P11D's.

However, if we are now going to see lots of incorrect letters we may need to take a different strategy and send a standard letter to the complaints team/MP/PM.... or maybe do nothing.

Roll on MTD when all these electronic submission problems will become a thing of the past!

Thanks (1)
Replying to Ivor Windybottom:
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By Red1960
03rd Aug 2022 11:55

Is that a flock of pigs I see heading of into the sunset?

Thanks (2)
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By Hugo Fair
02nd Aug 2022 17:06

"Employers should ask employees to check the information that will be submitted on the P11D in respect of their benefits, but this is not a requirement"
... 'should' (as in, wouldn't it be lovely if they did this)?

Because in over 30 years (with employers ranging from massive through to SME) I've *never* encountered that being a part of the process of generating/submitting P11Ds.

Thanks (4)
Replying to Hugo Fair:
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By NotAnAccountant2
02nd Aug 2022 18:16

Hugo Fair wrote:

"Employers should ask employees to check the information that will be submitted on the P11D in respect of their benefits, but this is not a requirement"
... 'should' (as in, wouldn't it be lovely if they did this)?

Because in over 30 years (with employers ranging from massive through to SME) I've *never* encountered that being a part of the process of generating/submitting P11Ds.

HOW should an employee check them?

Funnily enough, I received my first P11d with non-zero figures on it this year.

I didn't understand how my employer had got to the value they've given based on the documentation I had (difference of >10% of what I'd estimated) although I managed to come up with a calculation that (while I thought it was wrong) got me to within 1GBP of the P11d value. My figure was higher than their figure.

So I queried it with payroll. It turns out ALL the calculations were wrong, their original one, my one that got to almost the same value and my estimated one (which I thought wasn't quite right but should have been close enough).

The correct one (which now I have all of the details of the calculation I'm happy is correct) coincidentally is almost exactly the same as my original estimated figure but included a (small) additional item I didn't know about.

If it weren't for the fact that in 2022/23 I might need to accurately calculate my total income prior to the end of the tax year I would never have noticed (and presumably neither would HMRC as I'd have just copied the figure from the P11d)

But I now realize that it's going to be impossible for me to exactly calculate my P11d for 2022/23 ahead of the year end (although I'll be able to get it close enough)

I'm the sort of weird person who tries to reverse engineer the rounding methods on mortgage interest calculations so that I can get my calculation to agree to the mortgage statement down to the penny but even I've conceded defeat with NI and BIK calculations... HMRC's calculation of my income tax for 2021/22 and my calculation differed by less than 10 parts per million.

Thanks (1)
Replying to NotAnAccountant2:
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By Hugo Fair
02nd Aug 2022 23:08

The injunction that "Employers should ask employees to check .." was by Rebecca, not by me.

I was merely quoting it (in wonderment) as in 99.9% of cases it doesn't happen - and, as you rightly point out, even if it did 99.9% of employees wouldn't know if the figures are correct or not.
Most aren't even sure which BiKs are being received by them as taxable benefits, so simply copy the contents of their employer-supplied P11D into their SATR (if they are submitting one) ... in which case how will HMRC see any anomaly?

Thanks (4)
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By Hugo Fair
02nd Aug 2022 17:15

I don't regard "wealthy taxpayers" as deserving of any special treatment (harsh or generous), but the only reason I can see for HMRC to be targeting them through a piece of automated software ... is penalty farming.
Low costs (for HMRC) allied to a reasonable chance of some recipients paying up = low-risk profit!

Or is this just a last ditch attempt to screuu some £s out of taxpayers before P11Ds become extinct?

Thanks (2)
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By seitler
02nd Aug 2022 20:14

One of my clients got one of these letters a few weeks ago.
However we retrieved the P11D info from HMRC ! So how can it be any different ?

Thanks (2)
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By Paul Crowley
02nd Aug 2022 20:51

'A month to adjust
HMRC are currently writing to 5,500 wealthy taxpayers asking why the P11D data submitted by their employer for 2020–21 does not match the benefit-in-kind declaration on their self assessment tax return for 2020–21. Where a tax agent has been appointed they should receive a copy of the letter sent to their client.

The taxpayer is given 28 days from the date of HMRC’s letter to correct their tax return.'

If only HMRC count keep to that time scale when they get things wrong

Thanks (7)
Morph
By kevinringer
03rd Aug 2022 11:23

In the past, where HMRC had a P11D that the client had not received or forwarded to me, HMRC would just amend the Return and issue a P11D. I wonder if HMRC have had loads of cases where the P11Ds are wrong, thus this change of writing to taxpayers.

Thanks (0)
Morph
By kevinringer
03rd Aug 2022 11:24

"Where a tax agent has been appointed they should receive a copy of the letter sent to their client."

That is helpful. Too many occasions over recent years HMRC has only written to the taxpayer.

Thanks (1)
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By listerramjet
03rd Aug 2022 11:47

you say "wealthy", but is this correct? What makes a taxpayer wealthy? Surely the rules apply to all regardless.
But you are right that P11Ds come from the employer. Why on earth does HMRC require a taxpayer to resubmit information that it already has? Apart from creating the potential for a nice little earner from interest and penalties.
The employer will submit the P11D to the employee - surely this is the stage it should be checked and corrected.

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By Ian McTernan CTA
03rd Aug 2022 12:06

Why not just issue an amended tax calculation showing the figure HMRC think is correct- the taxpayer can then query this with their employer(s), derive the correct figure and cut out a needless nudge letter.

Half the taxpayers receiving the letter will probably ignore it anyway assuming their agent got a copy (which they probably don't).

Thanks (0)
Replying to Ian McTernan CTA:
Ray McCann
By Ray McCann
03rd Aug 2022 12:56

And why not just pre-populate the SA return with the employer P11D and dispense with the employee entry altogether. If the employee thinks it’s wrong they can query it with the employer.

Thanks (1)
Replying to RayM55:
Morph
By kevinringer
03rd Aug 2022 13:17

That is supposed to happen now but in reality the SA API is still not downloading pay and tax figures for most of our clients. HMRC needs to get its IT sorted and forget all this MTD nonsense; just make better use of the data that HMRC already has.

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By Mr J Andrews
03rd Aug 2022 17:55

If HMRC send out 5500 letters , prompting some checking liaison between employer and employee , chances are they { the Revenue } will find a couple of mistakes. Boxes ticked . Job done. Next please.

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My photo
By Matrix
04th Aug 2022 09:01

Given they are already collecting the tax through their tax code then this is a bit harsh.

High earning employees are too busy keeping the economy going to care about putting info on a tax return which HMRC has already.

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