Newsletter – May 2012

In this month’s enews we report on some issues pertinent to employers and employees.

Please contact us if you would like any further information.



P11D deadline looming

The forms P11D, and where appropriate P9D, which report employees and directors benefits and expenses for the year ended 5 April 2012, are due for submission to HMRC by 6 July 2012. The process of gathering the necessary information can take some time, so it is important that this process is not left to the last minute.

Employees pay tax on benefits provided as shown on the P11D, either via a PAYE coding notice adjustment or through the self assessment system. In addition, the employer has to pay Class 1A National Insurance Contributions at 13.8% on the provision of most benefits. The calculation of this liability is detailed on the P11D(b) form.

HMRC have issued some guidance as to common errors on the forms in the latest Employer Bulletin. These include the following:

  • Not ticking the director box if the employee is a director
  • Not including a description or abbreviation where amounts are included in box A, B, L, M or N of the form
  • Leaving the cash equivalent box empty
  • Failing to report the full gross value of the benefit where it is provided for mixed business and private use
  • Not reporting a fuel benefit where one is due.

Correct completion of forms P11D can be a complex issue. If you would like any help with the forms P11D or the calculation of the associated Class 1A National Insurance liability please get in touch.

Internet links: HMRC P11D guidance Employer Bulletin

Rising employment statistics

According to the latest statistics issued by the Office of National Statistics:

‘The unemployment rate was 8.3% of the economically active population, down 0.1 on the quarter. There were 2.65 million unemployed people, down 35,000 on the quarter. This is the first quarterly fall in unemployment since the three months to May 2011.’

Dr Neil Bentley, CBI Deputy Director-General, said:

‘It’s good news that 53,000 more people are in work now than three months ago, which shows that the private sector is gradually regaining confidence to hire.’

‘While this is the best jobs news we’ve had in a year, the Government must step up its welfare reform programme. Worryingly, over a third of those unemployed have been out of work for more than 12 months.’

‘With youth jobless numbers still stubbornly high, helping young people find jobs must remain a joint priority for businesses and government.’

Internet links: CBI press release ONS Bulletin

Employer end of year forms

HMRC are reminding employers that in order to avoid penalties they must file the Employer Annual Return (P35 and P14s) online and on time. The vast majority of employers must file electronically and the deadline for submission of the forms is 19 May 2012, which this year falls on a Saturday.

Where employers do not file their annual return by 19 May they incur a penalty of £100 per 50 (or fewer) employees for every month (or part month) that their return is late.

HMRC have been criticised for failing to make employers aware that they were incurring penalties on a timely basis. In a change to procedure HMRC will now issue employers, who they believe have yet to make a return, with an ‘Employer Annual Return Reminder’ from the end of April.

From the end of May HMRC will issue ‘P35 Interim Penalty Letters’ to relevant employers.

If you are unsure whether you need to complete a return this year please do get in touch.

Internet links: HMRC end of year guidance Employer Bulletin

Outstanding self assessment tax returns

HMRC are urging anyone who has still not completed their 2010/11 self assessment tax return to send it online before the end of April, or be charged daily penalties from 1 May.

Anyone whose return is more than three months late will be charged a further £10 penalty for each day it remains outstanding, up to a maximum of 90 days. This penalty is in addition to the £100 late filing penalty they have already received.

HMRC are advising that if an individual receives a late filing penalty but does not think that they need to complete a return, they should call HMRC on 0845 900 0444. Alternatively contact us so that we can help, as it may be possible to cancel the penalty if HMRC agree that the return is not due.

HMRC’s Stephen Banyard said:

‘We want the returns and not penalties. So, if you haven’t sent us your 2010/11 return, you need to do one of two things urgently – either send it online by 30 April, or call us if you think you shouldn’t have to complete one.’

Internet link: Press release

HMRC issue guidance on RTI to employers

HMRC have updated their guidance on Real Time Information (RTI). This new system of monthly PAYE returns is to be piloted from April 2012 and is expected to be compulsory for all employers from October 2013.

If you would like to read more about the new system please follow the link below. If you would like help with payroll matters please do get in touch.

Internet link: HMRC FAQs

VAT on hot food

HMRC are consulting on changing the rules on hot takeaway food to ensure that all food (with the exception of freshly baked bread) that is above ambient air temperature when provided to the customer is standard rated.

Currently the rules are complex as if food is hot because it has just been cooked, such as freshly baked pies or roasted chicken, these items may in certain circumstances be zero rated for VAT purposes.

We will let you know the outcome of the consultation.

Internet link: HMRC consultation

Charitable giving – cap on tax relief

The government is proposing to restrict tax reliefs available to individuals such as charitable giving.

Currently individuals can offset their entire income against income tax reliefs, and as a result may pay no income tax at all. It was announced in the Budget 2012 that from 6 April 2013 there will be limits to the amount of income tax relief individuals can claim.

This cap will apply only to reliefs which are currently unlimited. This cap will be set at 25% of income (or £50,000, whichever is greater).

HMRC propose to issue a consultation document on the detail of the policy, including the implications for philanthropic giving, in the summer. We will keep you informed of developments.

Internet link: HMRC press release

AAT Appoints Henry Cooper as President for 2012-2013

Henry Cooper FMAAT has been named as the new President of AAT (Association of Accounting Technicians), the leading professional education and membership body for accounting staff.

Henry was installed as President at the Association’s AGM on 18 May.  As President, he will be a key AAT ambassador, speaking at events – both within the UK and overseas – and promoting the benefits of professional education and training within the accountancy profession.

Elected to fellow membership in 2004, Henry has been an active member of the AAT Council since 2006 after serving as an appointed member of its Members’ Services Board. He is still an active member of the Milton Keynes and Bedford Branch, for which he has also acted as Chairman.

Henry initially finished school with one O-Level. He completed the AAT qualification after working at the Royal Mail and Fremantle Trust, before taking a position at Quanta Consultancy Services, supporting its UK and European divisions.

In 2001, he decided to become a member in practice – establishing BirchCooper Accounting Services which provides small businesses and start-ups with a full range of accountancy services.

“My experience has made me a strong supporter of the AAT’s Members in Practice scheme and I thrive on any opportunity to speak about and promote the programme,” Henry said.

Speaking of his new voluntary role, Henry said: “I want to be an accessible President. I’m keen to meet as many students and members as possible. I hope to do this, not just by the usual means, but by using social media and other channels as well.

“To be President of such a well-established and respected professional body is a privilege. The AAT qualification is world class.

“If I want to see one thing change, it’s the misconceptions by many of our members who think they have to achieve chartered status in order to be viewed as a credible accountant. These people often don’t realise that they can stay with AAT throughout their entire career, continuing their learning and development along the way,” Henry said.

Speaking of Henry’s appointment, AAT Chief Executive Jane Scott Paul said: “I am delighted to be able to introduce Henry as our new President. He has been an outstanding Vice President over the past year and I have all the confidence that he will continue to shine as he takes on this new role.”

News from HMRC about SA Penalties

Some of you will have seen press coverage recently about Self Assessment (SA) daily penalty notices being sent out in error. We (HMRC) are very sorry about this but here’s an update on the situation which we hope will help you to deal with questions from your members or your clients.

We have identified that nearly 12,000 people have been sent a Self Assessment daily penalty notice in error. We are really sorry and can reassure these customers that we know who they are and that this letter is incorrect – they do not owe a penalty. We are writing to all of them to apologise and to explain this error.
Many of the 12,000 customers are among the 130,000 who have already been taken out of Self Assessment, following a cleanse of the database and our invitation to customers to contact us if they felt that they shouldn’t be in SA. We can reassure these customers that they have been removed from Self Assessment.
It is very unfortunate that this process error has taken the shine off the good news that we have taken 130,000 people out of Self Assessment.

Further Information/Background

•    We have been approaching the new SA penalties with a clear message – we want the returns, not penalties. Through our efforts to remind those who haven’t already done so, targeted on known late filers, we have encouraged 500,000 more people to file on time than last year.

•    We have encouraged the remaining customers to file, and to file online, before daily fines kicked in on 1 May.

•    We have lifted 130,000 customers out of Self Assessment, following a targeted cleanse of the database and our invitation to customers to contact us if they felt they shouldn’t be in SA.

•    It is a straightforward process taking customers out of SA for the future. But it is a very complicated process to take them out from the past year.

•    We have identified that around 12,000 people have been sent a Self Assessment daily penalty notice in error. This letter is incorrect – they do not owe a penalty.

•    We know who these customers are and will be writing to all of them to apologise and to reassure them that they have been removed from Self Assessment.

•    Some of these 12, 000 customers were not being taken out of SA for the future but we had to alter their 2010-11 record as we had agreed to cancel the ₤100 fixed penalty for this year.

•    People affected will not need to take any action. They will get an apology letter and an amended SA statement to clearly show that no penalty is owing.