Landowners, farmers and rural business owners face a range of penalties for failing to meet various tax obligations, such as the late filing of accounts and statutory forms, and failure to keep adequate business records. According to Saffery Champness, while the tax authorities are considering simplifying financial penalties, there are still over 250 penalties that HMRC can impose.
Some of the most common penalties, incurred by rural businesses, result from a lack of transparency due to the on-line filing of information. “To save time and costs, HMRC has a strategy to get all submissions filed on-line”, says Mike Harrison, a partner of Saffery Champness Landed Estates and Rural Business Group. “However, unless businesses are well organised and diarise all the submissions to be made, they may well receive a penalty which is unlikely to be waived this year”.
Saffery Champness is particularly drawing attention to the 6th July deadline for filing P11D forms. These are the forms used for reporting benefits and expenses reimbursed to employees. All businesses employing staff need to ensure that they file their forms for 2010/ 2011 by the cut-off date.
Mike Harrison says: “HMRC has warned that P11Ds will be rejected if they do not provide information to the correct standard. Those businesses that have advised HMRC on their on-line Employer Annual Return for 2010-11 that P11Ds are ‘to follow', should send these in now. For on-line submissions, businesses will need to correct any problems before being able to file successfully”.
P11D forms are particularly relevant to farm and estate businesses because of the range of taxable benefits that employees may have and will be liable for. These include: living accommodation (although some may not be taxable); estate vehicles, mileage and fuel allowances, as well as interest free loans from their employer. With the current penalty regime being imposed by HMRC for incorrect Returns, it is advisable to take great care and appropriate professional advice before submitting the Returns.
Mike Harrison says: “Employers must provide details of the cash equivalent for any benefits in the P11D form. HMRC will then use them for determining the PAYE codes, and employees will use them for completing their self-assessment tax returns.
“It is important for employers to make their staff aware, in advance, of the amount of taxable benefit being charged. Otherwise, when their payslips arrive there can be some unpleasant shocks.
“The PAYE system is reliant on estimates provided by employers when completing their P11Ds and, unsurprisingly, those estimates sometimes produce inaccurate tax calculations. Both employers and their staff have a responsibility for those estimates. Getting advice on both P11Ds and PAYE codes can be very worthwhile so as to avoid unwelcome enquiries from HMRC and disgruntled employees”, Mike Harrison concludes.
For further information, please contact:
Mike Harrison (Saffery Champness Manchester): 0161 200 8383 mike.harrison@saffery.com
John Vaughan, John Vaughan & Co. Public Relations: 07596 106937 jvaughan@johnvaughan.co.uk
5 July 2011 by , 0 comments
You may also be interested in these posts
