Completing and submitting forms P11D can be both costly and time consuming, especially for larger businesses. Did you know that the Revenue might on application grant a dispensation so that routine expense payments and benefits that would not give rise to a tax liability need not be reported on forms P11D?
To enable the Inspector to grant a dispensation you must be able to demonstrate that:
- No tax would be payable by the employees on the expense payments or benefits
- Expense claims are independently checked and authorised within your company
- Each claim is submitted with appropriate receipts
HMRC will need to be certain exactly what expenses you reimburse and the method of control you use to identify expenses that might be taxable. This is to ensure, among other things, that if a dispensation was granted, and a taxable payment is made within a category of expense covered by the dispensation, it will be picked up and reported on the relevant employee's P11D. A dispensation does not mean that the accounting procedures for recording such expenses can be relaxed.
The application must be in writing, and may be by letter or, for smaller companies, by form P11DX, accessed from the HMRC website.
You should give as much detail as possible of the kind of expenses paid, the control procedures adopted for authorisation, approval and payment of expenses, and a copy of the expenses claim form.
If granted, the dispensation:
- Will be effective from the date granted - so it is worthwhile applying at any point in the tax year
- May cover all employees, a class of employee, or certain named individuals only
- Will be reviewed from time to time, and may be withdrawn if the conditions are no longer satisfied
We can save you a lot of time and trouble by helping with the application. Please contact us if you would like us to help.