So, you've dealt with the payroll year end. The Single Payment forms are in. What is the next iceberg looming on your horizon?
For many, June is the time to tackle forms P11d, 'Return of expenses payments and benefits', with H M Revenue & Customs' deadline for 2006/07 of 6 July fast approaching.
Helen Tustin, Manager at UK200 Agricultural Group member firm Ellacotts LLP, explains: "These forms are notoriously tricky, clients often don't understand the rules, and thus unwittingly provide inaccurate information to the farm secretary, accountant, or whoever else has been press-ganged into completing the forms. There are penalties for failing to make returns, or for fraudulently or negligently making incorrect returns. In practice however, significant penalties are rarely imposed by HMRC when an honest, credible attempt has been made at completing the forms.
"For those of you still to prepare 2006/07 P11d's- good luck!. Don't panic, go through the records systematically, and if in doubt consult the HMRC website http://www.hmrc.gov.uk/. Typing 'form p11d' into the search facility on the website leads to various useful reference documents. Always remember that the amount entered on the form should be gross of VAT. Remember also that there is no longer a benefit in kind charge if a van is used mainly for business travel and the only other use is for ordinary commuting, plus 'insignificant' private use."
Helen goes onto give a few suggestions for an easier time next year; "With regard to Vans, remember that benefits in kind for vans were changed for 2007/08 onwards. There is a new £3,000 benefit charge for the van itself, plus a new £500 fuel scale charge for private fuel. This regime applied from 5 April 2007, and can substantially 'tilt the playing field' against providing vans for private use by employees. If you haven't already done so, I would suggest you reconsider providing vans with private use to employees- the employees may not thank you for their van when they see their higher tax bill. Government policy continues to move towards 'greener' transport. When considering changing any vehicle, always check the CO2 emissions and look at the tax position for the business (scale charge, capital allowances and Class 1a National Insurance) and the employee (benefit in kind).
"Why not set up a file to note all P11d items/ copy invoices etc to, so the information is all to hand for next year. Or enter "P11D" in the narrative of all relevant items as you enter them onto the computer, so you can search for them next year."
Helen concludes: "Consider applying to HMRC for a dispensation, if you haven't already done so- see http://www.hmrc.gov.uk/forms/p11dx.pdf. HMRC can give a dispensation where no tax would be payable by employees on expenses paid or benefits provided. A dispensation can save time and effort for the business, and employees, who have to claim separately to ensure that they are not taxed on reimbursed expenses, etc, where no benefit exists.
"Also make sure that mileage payments paid are below the HMRC's Approved Mileage Allowance Payments, 40p per mile up to 10,000 per annum, 25p per mile thereafter."