The P11D form is used to notify HM Revenue & Customs of benefits that you have received from your company; these include private medical insurance, gym membership and company cars. However, you also have to report travel & subsistence and entertaining expenses that have been paid using the company credit card or reimbursed to you.
This can be a time consuming administration task and it gives HMRC the opportunity to look at the level of expenses paid, entertaining in particular, and make an enquiry into anything they believe is out of line with similar businesses.
This administration burden can be relieved by applying for a P11D dispensation.
So how does it work and what does it mean?
You apply to HMRC for a dispensation on form P11DX and give them details of your expenses policy, i.e. What type of hotels do you stay at when travelling, budgets for meals whilst travelling, such as if leaving before 7:00 and travelling more than 25 miles you can spend £10 on breakfast. HMRC Provide guidance on what they consider is reasonable at www.gov.uk.
If HMRC does not accept your expenses policy they will telephone or visit to investigate further. They will be particularly interested in director’s expenses and expect some procedure to have them checked by an external authority such as the company’s accountants. This can be easy to agree as part of a regular management reporting or year-end accounts routine.
The benefit of having an agreed dispensation is that the expenses no longer need to be reported every year saving valuable time.
The dispensation usually lasts between 3 and 5 years and the renewal process is usually straight forward.
If you would like more details please contact tax@aspirationsaccountancy.carciofinodev.co.uk and we can help you put a dispensation in place.
