File a form P11D?

When do I need to file a form P11D?

I have been asked questions similar to those set out below on numerous occasions about P11Ds. Let’s try and straighten out some of the facts.

"Why do I need to file a P11D return when I have not claimed any expenses apart from those that are company-related?"

"I have dispensation so why am I being asked to file a P11D?"

"I have not claimed any expenses apart from those that you suggested, so why do I still need to file a P11D?"

"I thought dispensation covered everything so why do I need to file a P11D?"

I think all these questions are relevant, and I was in a similar dilemma about it all some years ago too.

Firstly, you need to understand what a P11D return is: it is a return to record the expenses and benefits paid to employees/directors during the tax year. This means that all businesses that reimburse expenses or pay benefits to its employees and directors are required to file a P11D return.

Businesses that hold a dispensation certificate are not required to report expense reimbursements to its employees and directors, but businesses (including those who hold dispensation certificates) do need to report any benefit payments to its employees and directors.

Ideally businesses will not pay any taxable benefits to its employees and, therefore, reimbursement of expenses will be covered by a dispensation certificate. If you use this strategy, there is no requirement to file a P11D. There will be a lot less hassle, no reporting of either expenses or benefits, and little opportunity for HMRC to challenge or disallow your expenses.

With HMRC trying to police deadlines with punitive fines and, even, prosecutions, we strongly urge you to apply for dispensation and stick to expenses claims as per our guidelines. If you stick to these two suggestions, there will be long-term protection from HMRC and, let me assure you, you will also reduce your exposure.

Please make sure you understand what allowable expenses are, as these will not be treated as private benefits. See our blog on tax allowable expenses.

HMRC used not to be so very stringent about reimbursement of expenses through director’s current accounts, but now, DNS intend taking NO chances and urge all our clients to make sure they have a dispensation certificate in place to avoid any hassle in the future.

We have warned you before, HMRC are on the warpath, opening up all areas where they might be able to claw-back innocent, hard-working people’s money by way of cumulative fines. This is in order to plug the gap in the deficit. It really is that bad.

We hope you will take this as a polite invitation to find out more about DNS’s Dispensation Service.

Dispensation covers the following business-related expenditure:

Travel (but not to and from work)

Accommodation when away from the workplace

Subsistence/meal allowances when your are away from the workplace (see Expenses and receipts)

Reasonable entertainment expenses

Business-related books, magazines and subscriptions

Business broadband and telephone (if possible have a separate account for business and private use if you work from a home-office)

Mobile telephone (it must be registered to the business)

Courses, training and seminars that are business related

Purchases made with a company credit card can be included within a dispensation so long as they are business-related. To be absolutely tight with this, we advise that you do not use your business credit card or your business bank account for purchases that are not related to business.

We sincerely hope that this helps to clarify the situation with P11Ds. Should you still need further clarification, telephone your account manager without delay.

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.