Benefits in kind and forms P11D - £3,000 Fines!

You may know that HMRC are increasing their general tax collection efforts but particularly in the area of Benefits in Kind and employer compliance so as a result it is likely that your business will be affected.

Forms P11D should be completed for all company directors and most employees who receive benefits in kind as a result of their employment.

Fines that can be incurred include:

• If you file your P11D(b) late, you’ll be charged a penalty of £100 per 50 employees for each month, or part month, your return is outstanding after the 6 July deadline.
• If your P11D(b) remains outstanding for more than four months, you’ll receive a penalty notice shortly after 6 November and again the following March and July, if necessary. These penalty notices will show the amount of penalty that's building up because you haven't filed your P11D(b) on time. As mentioned above, this will be calculated at £100 per 50 employees for each month or part month if you delay filing your P11D(b).
• Penalties for the incorrect completion of Forms P11D are £3,000 per P11D per year and penalties for non-submission of Forms P11D due are up to £300 per P11D per year.

WHAT IS A BENEFIT IN KIND?

The basic rule is that if you provide an employee with anything other than salary it may count as an expense or benefit, and you will need to check whether you need to report it to HMRC and pay any tax or NICs on it to HMRC.

Common examples of expenses and benefits include company cars, health insurance, travel and entertainment expenses and childcare.

 DISPENSATION

A dispensation is available from HMRC that removes the requirement to report expenses and benefits on forms P11D, if an item is covered by a dispensation it means you don’t have any tax or NICs to pay on it.

The main expenses routinely covered by a dispensation are:

• travel, including subsistence costs associated with business travel
• fuel for company cars
• hire car costs
• telephones
• business entertainment expenses
• credit cards used for business
• fees and subscriptions

If you would like us to apply for a dispensation on your behalf please inform us so that we can agree our charges and then we can start completing the necessary forms.

Were you aware of the legislation? Are you currently complying? Do you need to complete a P11D? Still unsure, then contact us at Meades & Company and we can discuss it with you.