Contractors, don't make these P11D mistakes

Completing the annual return of benefits and expenses form P11D carries many risks, writes Stuart Daltrey, associate at chartered accountancy firm Moore Stephens.

A late or incorrect submission, or failure to submit, can result in unnecessary penalties and perhaps even result in a PAYE compliance review by HM Revenue & Customs.

Therefore, as contractor companies prepare their 2014/15 P11Ds for submission for no later than July 6th 2015, here are the most common mistakes we see and would warn against:

P11D dispensations

  1. Not reporting all expenses, irrespective of whether tax relief is available, where no P11D dispensation is held
  2. In group structures, the P11D dispensation has not been extended to cover all PAYE schemes
  3. Expenses not reported for certain groups of employees e.g. directors, not included in the dispensation.

General P11D completion

  1. Not advising HMRC that no P11Ds are due through the final EPS return for the tax year
  2. Submitting duplicate P11D information on paper where P11D information has already been filed online
  3. Using a paper form that relates to the wrong tax year (– check the top right hand corner of the first page)
  4. Not ticking the ‘director’ box if the employee is a director.
  5. Not including a description in the appropriate box where amounts are included in sections A, B, L, M or N of the form
  6. All P11D entries should be VAT inclusive, irrespective of whether the VAT can be recovered.

Expenses

  1. Not including the cost of utility and related bills paid for accommodation even where the accommodation itself is exempt
  2. Expenses for employees who work at home not reported where in excess of £4 per week
  3. Home to work and other private mileage (e.g. call outs and excess fares) not reported
  4. Reimbursement of an employee’s personal mobile phone bill not reported (exemption only applies to employer-provided phones).
  5. Where company credit cards are used, expenses reported at both Sections C and N.

Benefits

  1. Incorrect apportionment of private medical insurance where premiums renewed during the tax year
  2. Overdrawn directors’ loan accounts not reported as a beneficial loan
  3. Omitting entry at Section B where PAYE on share option gains not recovered within 90 days
  4. Incorrect CO2 and/or fuel type for company car
  5. Incorrect List Price values used for company cars (e.g. wrong model, ignoring accessories).
  6. Showing 5/4/15 in “To” box when company car continues to be provided into next year.

Know your deadline

Remember, the deadline for submitting your 2014/15 Forms P11D and P11D(b) is July 6th 2015.

But if you have a Class 1A NIC liability as shown on the P11D(b) for 2014/15, the payment deadlines are as follows:

  • 19th July 2015 – for postal payments
  • 22nd July 2015 – for electronic payments
May 27, 2015