Applying for a P11D Dispensation - Form P11D(X), Yes or No ?

January 21, 2011 2011

yes no

We would suggest a No in most cases ! 

 Why ?

Because using the form to apply for a P11D Dispensation can often make life harder for employers which is the exact opposite of why the form was introduced by HMRC in the first place. What do we mean by this ?

The biggest problem is that any form which involves box ticking encourages laziness - on both sides. We often find that employers using P11D(x) don't explain their specific details enough, or at all, e.g. types of expenses being reimbursed to employees where these are slightly different to HMRC's 'norm', the procedures involved (which, in our experience often vary from company to company), reporting systems, etc etc. At HMRC's end, the form is received, someone checks all the right boxes have been ticked and then before you know it a standard letter is issued granting the P11D Dispensation without any further questions being asked.

The consequence of this laziness often rears its ugly head when HMRC come to do a PAYE audit. The employer's (over) reliance on the (vague and basic) Dispensation coupled with HMRC's lack of awareness of some of the things the employer is doing / not doing on employee expenses is usually when the gloves come off and things start to get messy. Where HMRC become aware of slack or inappropriate expense processes, which contravene the rules for receiving a Dispensation, they are well within their rights to revoke the Dispensation and to look at employee expenses as if the Dispensation never existed - which can be hugely problematic for the employer.

Which, coming back to our original comment, is why we normally recommend to clients that they do NOT use form P11D(x) in applying for a Dispensation. Our advice is to do it the traditional "proper" way, i.e. a detailed letter enclosing all relevant policies etc. This way there can be no ambiguity and less chance of HMRC disregarding any agreements they have previously given when undertaking a PAYE audit in the future.

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