Confused over expense claims/P11d

[TheCyclingProgrammer]

I've spent ages looking through HMRC documents, asking my accountant and reading through countless threads on here but I'm still confused.

Since I started up my company in January, there have been various company expenses that I've had to pay for from my own personal credit card or bank account for various reasons (e.g. waiting for business bank account to be setup, pre-incorporation expenses, online payments whilst waiting for business credit card application).

These have all been invoiced to the company but paid for by me. I've then claimed these expenses back from my company (i.e. I transfer the amount from my business account back to me).

My accountants are claiming that these expense claims need to go on my P11d however this quote from the HMRC expenses document (480) claims otherwise:

Purchases on employer's behalf
Businesses are often run in such a way that employees make payments on their employer’s behalf.
For example, an employee may buy stamps, stationary and items of equipment for the employer
and be reimbursed the costs incurred from petty cash or by cheque. Such transactions are not
providing the employee with either earnings or expenses because the employee has received no
money of his own. Accordingly such reimbursements do not feature on the P11D.

Who is correct? Am I overlooking something obvious? All of these "expenses" have been accounted for as business expenses.

[pmeswani]

Who is correct? Am I overlooking something obvious? All of these "expenses" have been accounted for as business expenses.

I fail to see where the problem is. If you are claiming expenses for things like mileage, food, mobile phone, internet, etc. etc. then you need to declare that on P11D. If you are buying stamps for legitimate business activity that can be done via petty cash, then it doesn't need to be declared on P11D.

[IR35 Avoider]

As long as you don't omit anything which could conceivable/arguably (in the opinion of HMRC, not yourself) be personal expenses, it makes no difference to what extent you put other expenses paid for personally on the P11D. If everything on the P11D relates to valid company expenses, you will claim it back as employment expenses on your tax return, and there will be no tax consequences. If any part of what is on the P11D, whether paid for personally or directly by the company, is not a valid company expense, then you will be taxed on the benefit when you (being totally honest) do not claim that part as an expense when filling in your tax return.

My accountant makes me put everything I pay for personally on the P11D. Items paid for with a company credit card are also always all included, though I've never understood why a company credit card is treated differently from a company cheque in this regard.

I never buy personal items throught the company, and always offset 100% of what appears on the P11D by claiming it as an expense on my tax return. In most years I've put a note saying all expenses were employer expenses that were refunded to me, I don't know if this has made any contribution to me never having had my expenses investigated.

I suspect the accountant is just being cautious This approach means the P11D (prepared by the accountant but signed by the director) is never questionable, and if the contractor is trying to claim anything questionable, that mistake is between him and HMRC, as the "error" only appears on the personal tax return, which is nothing to do with the accountant.

Accountants have a reputation with HMRC to uphold: if one client is found doing something dodgy, which the acountant was aware of, I believe other clients are more likely to get investigated as a result. Therefore it is in the interest of the accountant and their clients in general that accountants interpret rules in a way that is least likely to attract attention from HMRC.

Edit: I suppose another reason why an accountant might have a policy of putting everything on the P11D, is that the increased visibility of the expense might make clients slightly more inclined to think about whether they can really justify it to HMRC. What seems justifiable when you're using a company credit card on the internet might seem less convincing when you have an HMRC inspector sitting across the table, fixing his glinty stare on you. (Not that I speak from experience, a former tax inspector turned poacher said this in a tax book I once read.)

[TheCyclingProgrammer]

I fail to see where the problem is. If you are claiming expenses for things like mileage, food, mobile phone, internet, etc. etc. then you need to declare that on P11D. If you are buying stamps for legitimate business activity that can be done via petty cash, then it doesn't need to be declared on P11D.

I can give you a list of exactly what I've claimed expenses for as its not a very big list: accountancy fees, office printer, some software, a few office sundries (cables, power strips etc.), web hosting and my PCG membership [1].

Now I have a business credit card for online purchases its unlikely I'll need to make these kind of purchases personally again in the future so any future expense claims will likely be legitimate P11d expenses, but I'm just concerned with this years P11d for now.

[1] I'm aware there is a question mark over PCG membership and have read through the threads on here regarding this.

[TheCyclingProgrammer]

I fail to see where the problem is.

The problem here is that I've got my accountants telling me one thing and conflicting information on the HMRC website which is what has left me confused.

[TheCyclingProgrammer]

IR35 Avoider - thanks for your reply.

So it seems to me that whether or not I need to "technically" include these things on my P11d, the simplest thing would be to just include everything on it and then if they are all legitimate expenses claim them as such on my tax return.

Would anybody else agree with that assessment?

[xoggoth]

Have heard various versions myself (we had this argument on CUK last year I think) but generally it is only things that might be a a BIK, like accomodation etc, that really need to go on P11D.

[EchoSierra]

I see multiple threads on P11d every year and just wish HMRC would get rid of it or simplify it 'cause there's so much conjecture and uncertainty out there...

At the end of the day I'd go with what your particular accountant says since you have a comeback to the taxman. Not that you are no longer liable for what you/accountant put down (you are liable) but at least you can truthfully say I'm thoroughly confused about the P11d and I did what the accountant advised me to do since that's what I pay him/her for. If you are in the wrong you might only have to pay the amount + interest and no fines.

[blacjac]

Have heard various versions myself (we had this argument on CUK last year I think) but generally it is only things that might be a a BIK, like accomodation etc, that really need to go on P11D.

That's my take on it too.

As a permie I only ever say a P11D when I had a company car (Obviously BIK), so just assumed that it was only for BIK expenses.

However I have since found out that as an employee, you don't actually have to get a P11D, as long as your employer has filed one for you, so this mak not be the case.....

[expat]

Have heard various versions myself (we had this argument on CUK last year I think) but generally it is only things that might be a a BIK, like accomodation etc, that really need to go on P11D.

This is AIUI too. Some accountants err on the side of caution, which is probably no bad thing for him or for you.

It seems to depend on the difference between buying something directly for the company (e.g. stamps) and buying something for yourself for company business reasons (e.g. a hotel stay); there can obviously be scope for difference of opinion on which case a particular purchase falls into.