P11D, once and for all

[PAG]

HM don't agree with dispensation with 1 man and small businesses.

[philip@wellwoodhoyle]

Thanks Phil - whats the likelyhood of a small company getting dispensation - I thought this sort of thing they only gave to the big companies [ brollies / accountants ] etc.

Depends on the tax office and the company officials. If there is independent review (i.e. a different person signing off the expenses claim form) such as a co-director, company secretary, etc. then most tax offices will grant a dispensation. Our experience is that some tax offices will automatically reject applications from "one person" companies, but most will grant it. Certainly, the majority of our IT consultant clients do have a dispensation. It seems that the larger offices (Wrexham, London Provincial, Glasgow) won't, whereas smaller one (York, West Yorkshire, Cumbria, Lancashire, Southend) will. Unfortunately, as it is discretionary on the part of HMRC, there is no procedure for appeal, so individual offices make up their own rules. It's got to be worth a try for the sake of a letter.

[basshead]

So, what basshead said was wrong, and absolutely anything I pay for from my personal account which the company reimburses me for - must be listed on a P11D and then be cross-referenced on my self assessment, and this includes all of the following:

Buying a fax machine
Buying a ream of A4
Hiring a projector
Subscribing to MSDN
Joining the PCG
Hosting the company web site
Paying a subcontractor
Buying insurance
Taking a train to a meeting
Hiring an accountant

You learn something new every day

[ittony]

Thanks all! So this dispensation request, do I have to specify exactly what I'd like it to cover? And if so, is that specified in terms of product, or supplier, or something else?

[boredsenseless]

You learn something new every day

Why were these things paid for personally anyway. Pay for everything out of the company account. Then none of it is a personal expense.

Bear in mind though that this doesn't absolve you of the two year rule so even if travel and accomodation are paid for by the company if you breach the rule it is still a bik even though you personally don't get reimbursed.

[IR35 Avoider]

I hate claiming expensese from the company precisely because I don't want P11D entries Hector might one day want to investigate. What really annoys me is that I got a company credit card to make company purchases with, and then accountant told me that anything bought on the card would still count as expenses. (Not sure she was right about this, and I think she may have changed her mind in recent years.)

[Bluebird]

I hate claiming expensese from the company precisely because I don't want P11D entries Hector might one day want to investigate. What really annoys me is that I got a company credit card to make company purchases with, and then accountant told me that anything bought on the card would still count as expenses. (Not sure she was right about this, and I think she may have changed her mind in recent years.)

Well if you use the company credit card then the company is paying for it, if any of the "expenses" are deemed to be BIK then you would as an individual have to pay NIC & IT on it.

The reason to use the company a/c is that if say you buy a laptop, it's less likely to arose questions if it's the company that pay for it or if you pay for it and then expect to get reimbursed.

The other point of course is that if you pay out of your own money [ this has been subject to Tax - either NI IT or CT ], whereas if you pay out of the company a/c then it's basically tax free as it's just deducted from the company profit.

[ittony]

Why were these things paid for personally anyway. Pay for everything out of the company account. Then none of it is a personal expense.

Because my suppliers want credit card details but all HSBC have given me to pay for things with is two half a kilo books of detachable slips which I believe are called cheques and were used as a method of payment in the olden days.

Although I see that 'IR35 Avoider' disagrees with you about whether paying for things from the company account makes any difference about whether it goes on the IR35 or not anyway.

[basshead]

Why were these things paid for personally anyway.

Simple, I only have a company cheque book, so e.g. paying PAYE online is only possible with personal funds. Likewise for any online (i.e. credit card) purchase of hardware.

[ittony]

Simple, I only have a company cheque book, so e.g. paying PAYE online is only possible with personal funds. Likewise for any online (i.e. credit card) purchase of hardware.

Blimey, so you have to put your entire wage bill on your P11D as well, that's ridiculous.