HMRC Compliance Action - Employee Benefits Letters

We wanted to bring to your attention that HMRC are sending targeted letters to employers, motivating consideration of whether all benefits in kind have been declared. They are a timely reminder that employers must ensure all benefits are appropriately considered and HMRC reporting undertaken where required.

Dated: 17 June 2019 Author: Sam Davies, Head of Employment Services

HMRC Campaign

An example letter, suggesting HMRC’s contact is based on a review of accounts and previous P11D submissions. Benefits we’ve seen targeted so far are:

  • Staff entertaining: costs shown in accounts, but no benefit declared to HMRC via P11D or PAYE Settlement Agreement (“PSA”)
  • Private fuel: provision of company car benefits declared on previous P11D forms, but no private fuel benefit included

It is unsurprising these are targeted, as we commonly see mistakes regarding both.

HMRC has not communicated well: the letters do omit to explain potential exemptions from reporting and liabilities, but not declaring taxable amounts will result in liabilities to tax and NIC, plus interest and penalties.

What should I do?

There is still time to act for 2018/19. The deadline for P11D submission is 6 July, 5 July for agreeing a PSA contract with HMRC. Taking professional advice to correctly establish the position will be beneficial, especially in the event of a future HMRC review. We can help by undertaking:

  • PSA application and completion; a PSA is appropriate for minor, irregular and impractical-to-otherwise-report benefits, where moving of tax liability from the employee to employer is wanted
  • P11D completion and submission
  • An employment taxes review, a mock of HMRC’s employer review. We will identify both risks and cost-savings opportunities

Need further assistance?

If you have any questions or would like our support, please contact either:

James Hunt, Senior Manager, Employment Services, jhunt@dains.com, 0121 200 7922 or Jack Bonehill, Assistant Manager, Employment Services, jbonehill@dains.com, 0121 200 7967.

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