Make sure you avoid the pitfalls when you return benefits forms
P11d season is with us once again as the deadline of the 6 July for submission gets ever closer.
The P11d is the return made to HM Revenue & Customs regarding the payment to employees of expenses and benefits.
This information can be difficult to collate, as it often comes from various different sources, and the relatively short time span in which the forms must be submitted makes the task a little trickier.
Also, not every employer is aware of what has to be included on these forms, as what often appears as a legitimate business expense, often falls within the revenues definition of benefits.
Take providing the employee with a broadband connection at home, enabling them to work from home. This can have excellent benefits to the business, but the cost nearly always has to be treated as a benefit and Class 1A national insurance charged on this.
An area that can prove particularly difficult is overdrawn directors’ loan accounts. The entries that need to be made can involve extensive analysis, as the opening, closing and maximum overdrawn balances need to be established. It is very rare that this information can be provided from the accounts, as they are often not finalised at the time the P11d needs to be submitted.
There are many other items that need to be considered, examples of these include the payment of home telephone costs, payment of mobile telephone bills not in the company name, the cost of annual parties for employees as these cannot exceed £150 per head through the year, any overnight expenses exceeding £5. The list of ‘benefits’ goes on and on, and getting the forms wrong can have severe consequences.
The current fines for late submission are not too onerous at £100, however, the incorrect submission of these forms is worse, with fines up to £3,000 per return. That’s why expert help is always worth considering.
The HMRC website has a useful P11d guide, as well as an A-Z guide regarding the expenses that could be considered for inclusion on the forms and how they should be entered, there is also a Quality Standard guide which points out common errors which is always a good place to start! Alternatively, your accountant should be able to assist you with completing the forms.
Biggleswade Chronicle - 18 June 2010