FAQS for November 2013

November 2013

Staff travel expenses
Q: My business is growing and as a result, my staff have started incurring travel expenses. Is there anything I should be aware of?
A: Normally where an employee incurs business-related expenses, the reimbursement of them should be rported on a P11D but the employee can claim a deduction for them. Therefore, there is no impact on the employee’s tax liability but there is some paperwork to be completed.
As an alternative, you could pay the HMRC benchmark travel and subsistence payments, which are:

• 45p per mile for the first 10,000 miles; 25p per mile thereafter
• £5 for breakfast if the business journey starts before 6am
• £5 if the employee spends more than five hours away and buys one meal
• £10 if they’re out for more than ten hours and they buy two meals
• £15 if they are out beyond 8pm, and buy an evening meal

Your staff must purchase some food and with the benchmark subsistence payments, but it could be just a sandwich and anything they don’t spend is theirs to keep tax and NI-free.

Category: PAYE, NIC & Benefits In Kind

VAT on staff Christmas presents
Q: I’ve just purchased a bulk load of chocolates and bottles of wine for staff Christmas presents. Can I reclaim the VAT on them?
A: If you give away goods and are entitled to recover VAT on them, you must account for VAT on their cost value. So I’m afraid this means the VAT position is neutral.
However, you do not have to account for VAT on ‘business gifts’ made to the same person so long as the total cost of all the gifts does not exceed £50 (excluding VAT) in any 12-month period. A ‘business gift’ is simply a gift of goods that is made in the course of your business.
Gifts and entertaining is a complex area, as it can have a multitude of tax, National Insurance and VAT implications.
Category: Value Added Tax (VAT)

Received a P800
Q: I have received a P800 from HMRC saying I have underpaid tax for 2012/13. What should I do?
A: Most people should have paid the right amount of tax through the Pay As You Earn (PAYE) system and there is nothing more for employers, employees or HMRC to do - so you do not need to be concerned if you do not get a P800 Tax Calculation. However, if you have been sent a P800 tax calculation by HMRC, it either means you’re getting a tax refund or you need to pay more tax.
If you receive a P800 Tax Calculation, it's important you check it to make sure you agree with the information included as HMRC have been known to make errors. The calculation will show your total taxable income, the allowances that are due to you and the amount of tax paid for each of the relevant tax years. It will also show the amount of over or underpaid tax.
Where your P800 shows non-PAYE income such as bank interest or other investment income, the figures will be estimated as HMRC doesn’t have direct access to these details and relies on you to provide them. So make sure you compare these figures in particular to your own records.
If you agree with the tax calculation you do not need to do anything but keep it safe. If you don't agree with the P800 Tax Calculation, you should call HMRC as soon as possible.
If the P800 shows you owe tax of £3,000 or less, where possible will HMRC aim to collect it by adjusting your code for 2014/15 so you’ll pay the extra tax through your earnings for that year.
Where the P800 shows you’ve overpaid tax, you’ll receive a cheque, usually within 14 days.

Category: Income Tax

Tax on Staff Christmas Gifts
Q: I’m looking at what to order for my employees for their Christmas presents. Is there any advice you have for me? I don’t want my employees to pay tax or National Insurance on their gifts- or the hassle of any extra admin!
A: If you buy your employees a seasonal gift such as a joint of meat or a box of chocolates, then this would be deemed ‘trivial’ and therefore, there are no reporting requirements and nor would any tax or National Insurance be triggered.
However, if your gifts are more lavish than the examples above- say a hamper, case of wine or vouchers - then the cash equivalent must be taxed via the payroll, form P11D or a Pay As You Earn Settlement Agreement (PSA). With the first two options, tax and National Insurance will be triggered and will be deducted from the employee. However, with a PSA the employer agrees to settle their liability.
Gifts and entertaining is a complex area, as it can have multitude of tax, National Insurance and VAT implications.
Category: PAYE, NIC & Benefits In Kind

Missed the tax return deadline
Q: I received my paper tax return earlier this year and totally forgot to complete and send it to HMRC. Will I now get fined £100?
A: No, because you still have the option to file your return online with HM Revenue & Customs (HMRC) and as an incentive to go paperless, HMRC allow until 31st January 2014 for submission. Provided you successfully file your return online with HMRC by this date, you will not be charged the £100 penalty.
However, if HMRC receive a paper 2012/13 tax return from you now the 31st October deadline has elapsed, you will be charged the £100 penalty automatically.
And remember, a late return will cost you a £100 penalty; even if there is no tax to pay or you pay the tax due on time. Furthermore, the penalties will increase the longer the delay in filing.

Category: Tax Returns

Lost receipts
Q: I have lost some of the receipts for my business. Where do I stand on recovering the VAT on them?
A: In order to exercise your basic right to recover the VAT on them, you must hold a valid VAT invoice.
However, in the absence of such an invoice, you may still be able to make a claim for the VAT, but these claims are at HMRC’s discretion. According to a HMRC Statement of Practice, they will look for alternative evidence where there is no valid VAT invoice, such as:

• Alternative documents, such as a supplier’s statement, purchase orders, etc
• Evidence of the receipt of the goods/ services, such as delivery notes
• Payment records
• Records of onward sales or consumption of the goods/ services

You should also be able to prove the existence of the supplier, by say having their VAT number.
The above list is not exhaustive and just to reiterate, accepting a claim for VAT where there is no valid VAT invoice is at HMRC’s discretion.

Category: Value Added Tax (VAT)

Disclaimer – advice shared in this column is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this column, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.