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Quality standard for P11Ds

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14 May 2009

Forms P11D must be completed by employers to record employees' expenses and benefits. The forms for 2008/09 must be submitted to HM Revenue & Customs (HMRC) by 6 July 2009.

To help with the processing of forms P11D, HMRC has introduced a quality standard for them.  By following the quality standard it will reduce the likelihood that HMRC will need to contact you to check details or to request replacement forms.

The quality standard is similar to that already used for the end of year payroll form P35.

The quality standard asks that employers ensure all forms include:

  • employer reference
  • employee’s name 
  • employee’s national insurance number (or date of birth and gender)
  • the list price of any car provided 
  • if box 10 in section F (total cash equivalent of car fuel provided) is completed there should also be an entry in box 9 (total cash equivalent of cars provided)
  • if section H (interest-free and low interest loans) is completed there should also be an entry in box 15 (cash equivalent of loans)

If P11D information is provided in list form employers should ensure the list includes:

  • all benefits for each employee on one list
  • employer reference
  • employee’s name
  • employee’s national insurance number (or date of birth and gender
  • the full range of benefits and expenses contained on form P11D
  • the benefit code numbers from form P11D
  • all the information for an employee on one page
  • a font that is easy to read and no smaller than 11-point Arial 

P11D tips

Meet the deadline
Forms P11D must be completed by employers to record employees’ expenses and benefits. The forms for 2008/09 must be submitted to HM Revenue & Customs (HMRC) by 6 July 2009. Failure to submit the forms on time could result in penalties being levied.

Get it right
Completing P11Ds can be notoriously difficult, but it is important to get them right or you could incur penalties.

Penalties
Although historically HMRC have not imposed the heavy penalties open to them for late and/or incorrect returns it is expected that this will change.

The maximum penalties available to HMRC are:

  • £3,000 per form for incorrect forms;
  • £300 per form for late forms; and
  • £60 per form for each day a form remains outstanding

Top tips for completion

  • Refer to HMRC’s new quality standard to avoid obvious errors. (please put a link in here to the other article)
  • Only put dates in the ‘dates car available from’ and ‘to’ boxes if the car was not available for the whole year.
  • Where you provide benefits which are:
      • minor items (for trivial items see below);
      • made available on an irregular basis; or
      • impractical to include because the precise value is difficult to quantify
  • Consider whether to use a Pay-as-you–earn Settlement Agreement (PSA). This is a voluntary agreement between you (the employer) and HMRC that the company will meet the tax payable on the benefits provided to the employees. Common items to be included in PSAs are gifts, free chiropody care and even the minor use of a company vehicle.
  • If you provide any trivial benefits you should contact HMRC and ask that these be ignored. There is no lower limit under which a benefit will be treated as trivial, but it should be so trivial that it is not worth pursuing.
  • Consider applying for a dispensation (if you do not already have one) on expenses and benefits where no tax would be payable by staff. Such an agreement strictly only takes effect from the date HMRC agree to the dispensation, although HMRC may agree to backdate it to the start of the tax year. If you already have a dispensation make sure it is up to date.
  • On an ongoing basis you should monitor expense claim forms and mileage records to ensure they are accurate.
  • Do not forget some benefits are tax free and therefore do not need reporting e.g. annual events costing £150 per head or less, £3 per week for working from home, mobile telephone and long service awards. 
If you would like help completing your P11Ds, applying for a dispensation or PSA please speak to your usual Hazlewoods contact or e-mail tax@hazlewoods.co.uk