P11D reporting: how to avoid resubmissions of expenses and benefits

We are now a couple of months into the new tax year, but as yet, we have not completely finished with the old.

Still on the ‘To do’ list is the completion and successful submission of the P11D and P11D(b) form, listing all expenses and benefits made to employees during the tax year. With only a few weeks left before the deadline it is time to complete and review the returns, making sure that all information is complete and correct before submitting to HMRC.

Below is a quick whizz around the mechanics of submitting the reports and paying the NIC (national insurance contribution) liability.

Completion of P11D

The P11D and P11D(b) is due 6 July. To miss this deadline would be to incur potentially heavy penalties. To avoid any delays and subsequent penalties, below are some typical errors, the changes and penalties involved in the P11D process.

Typical errors

One of the most popular benefits to be received by an employee is a company car, and it is here that errors occur. The main errors are to do with fuel, accessories provided, CO2 emissions and capital contributions made by the employee. Another mistake is incorrect dates when the car was, or was not available, or unnecessarily completing the ‘from’ and ‘to’ date boxes. HMRC assumes that the vehicle was available all year unless told otherwise.

Any amendments, or errors could mean missing the deadline of 6 July and therefore incur penalties as below.

Key changes

Due to recent legislation changes several field tables in the P11D have been amended for the 2017-18 tax year. The key changes are that now boxes need to be completed for ‘Amount Foregone’ and ‘or Relevant Amount’ These are a result of the optional remuneration arrangement changes brought in April 2017.

This means that the payroller must accurately complete the information in line with the legislative changes. To help with this HMRC have updated the relevant worksheets.

Other changes have been made regarding passenger payments reporting. Previously they were to be entered in Box E, but Box E is now used for the reporting of mileage allowance payments. Passenger payment must now be entered in Box M, on the second line (the first is now used for Class 1A NICs).

Submission of P11D

The P11D can be submitted to HMRC in one of two ways:

  • Online filing (which will check for, and identify, common errors, meaning less risk of rejection, less risk of delay and consequently less chance of incurring penalties)
  • Paper format. Whether submitting or resubmitting a return it should be sent to

P11D Support Team

BP1 102

HM Revenue and Customs

Department 1250

Newcastle-upon-Tyne

N398 1ZZ

Completion of P11D(b)

This is the return for Class 1A NICs due. It also includes the employer’s declaration that all expenses and benefits have been accounted for. Only one P11D(b) is required for each PAYE reference.

If there are no Class 1A NICs to report then no return needs to be filed. HMRC may request a submission of a P11D(b), in which case confirmation that no Class 1A NICs are due can be done via the online declaration ‘No return of Class 1A NICs’ located https://bit.ly/2ge4VJR

If a paper submission is preferred then this must be done on an original document with an original signature as HMRC will not accept any other type.

If the paper submission is for a resubmission then the P11D must show all the original expenses and benefits, not just the amended ones, which could mean a total re-write.

To help calculate the Class 1A NIC liability the P11D is colour-coded. The colour brown denotes the expenses and benefits that incur a Class 1A NIC liability, and the colour blue those expenses and benefits that do not.

Paying Class 1A NICs

Now to the mechanics of actual payment of the NIC liability. When paying the normal accounts office reference must be quoted followed by ‘1813’. The ‘18’ stands for the tax year 2017-18, and ‘13’ to ensure that the correct allocation of funds happens. Without it HMRC may not be aware that the payment was made.

Penalties

The penalties are comprehensive and act as a deterrent to non-compliance. As a reminder of the potential financial cost:

Failure to submit P11D return by due date Penalty ≤£300 and daily penalty ≤£60 per day, per return for as long as return outstanding
Incorrect P11D return ≤£3,000 per return
Failure to submit P11D(b) return by due date First 12 months of lateness – £100 per month, or part month, for each batch or part batch, of 50 earners for who Class 1A NICs is payable

Over 12 months of lateness – amount not exceeding the total of unpaid Class1A NICs due at 19 July

Incorrect P11D(b) return Penalty not exceeding the difference between Class 1A NICs returned and the Class 1A NICs that were due

So, there you have it. A quick update and reminder of what is left to be completed before the 2017-18 tax year is finally put to bed.

To sum up the process: Complete, submit and relax.

Julie Hodgskin is a fellow member of AAT, runs a licensed accounting practice and is a technical materials author for CIPP.

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