Posted on 10 May 2016
With effect from 6 April 2016, all P11D dispensations agreed with HMRC became invalid. Instead, new legislation was introduced to exempt from tax business related expenses paid or reimbursed by an employer. Examples of business related expenses include travel and subsistence and business entertaining.
Going forward, HMRC’s expectation is that employers will be able to evidence that governance and control processes are in place to support the business nature of the expenses incurred. They will expect that all employers will:
Have evidence that they have considered and identified their tax risks;
Have processes and policies in place to manage those risks;
Be able to demonstrate that those processes are reviewed and checked on a regular basis (10% of claims checked every 3 to 6 months)
Be able to evidence that the risks are regularly re-evaluated in line with legislative changes etc.
Smith Cooper's team of Employment Tax advisers are ideally placed to help your business meet HMRC expectations and reduce the risk of unexpected future tax costs/penalties.
As ex-HMRC Compliance Inspectors, Laura Parr and Mick Verney have over forty years’ experience between them in helping clients on employment tax issues and they have developed a simple four step plan providing a robust governance process that ARMS your business against potentially costly HMRC Inspections.
Carry out a high level risk assessment of your current processes and policies. If requested, additional reviews can be undertaken in respect of specific risks eg. employment status, expenses etc.
Provide verbal feedback on the day and, if required, a detailed written report highlighting potential risks and providing pragmatic recommendations and solutions.
Help you to manage the process by drafting policies and systems that are specific to your business needs and simple to operate.
Provide continuing support, with timely updates on changes to relevant legislation and HMRC practice. Annual 'healthchecks' to ensure your processes remain valid and compliant. Always just a phone call or email away!
If you would like more information on the new HMRC approach and how Laura and Mick can assist your business, please contact them directly.