Cut red tape … get a P11d dispensation
For those of you who are one-person limited companies and/or have employees, you may be aware that reimbursements of expenses (excluding mileage within approved rates) should be reported to the Inland Revenue on P9d or P11d and included within the claimant’s tax return. This can add quite a burden onto the company’s administration and also incur fines if returns are not completed correctly or submitted late.
However, there is an easy way to reduce this administrative burden – apply for an expense dispensation.
Depending upon the type of business, various business expenditure can be included within the dispensation and may remove the need to complete p9d/p11d for some employees (car, fuel, health insurance etc benefits must still be reported).
Expenditure coming within a dispensation.
Expenditure which can be included within a dispensation include travel, accomodation, subsistence/meal allowances (at an agreed rate), reasonable costs of entertainment, books/magazines/subscriptions relating to the business. Purchases made via company credit card can also be included within a dispensation if business related or where, if personal, they are reimbursed to the company immediately [eg via deduction from pay].
Expense claims
One of the terms relating to a p11d dispensation is that expense claims must be supported by vouchers/receipts etc and should be subject to checks by senior personnel. However, where a dispensation is applied for by a one-person company I would suggest that the dispensation application states that independent checks are carried out by the external accountant on a quarterly/ six monthly basis (in any event at the latest by 5 April) so as to confirm that expenditure has been claimed in accordance with the agreed policy for the tax year.
Download the application form http://www.hmrc.gov.uk/forms/p11dx.pdf
If you would like HRBS to apply for a p11d dispensation on your behalf and/or act as the external accountant for expense voucher checking, please contact us or call 01226 379000.
