The Expenses Minefield04/10/2016
HMRC regulations and laws are changing in favour of simplified procedures, overseen by the Office of Tax Simplification. The fundamental responsibility of your expenses reporting is to be able to prove that any expenses are genuine, and this has not changed.
Currently at the end of the tax year you would usually submit a P11D form to HM Revenue and Customs for each employee you’ve provided with expenses or benefits. However, for the tax year 2016/17, HMRC have been pushing for companies to include any expense reporting into their payroll system.
Other significant changes have been the abolition of the £8,500 threshold for taxing 'benefits in kind', the voluntary pay rolling of benefits in kind and the replacement of dispensations with an exemption for paid or reimbursed expenses.
Now, as previously mentioned, these changes are there to simplify the business expense reporting procedure. While the withdrawal of the need for dispensation will save some precious hours of your time, it is the overhauling of your own expense procedures which can leve you open to risk. Employers who did not have an existing dispensation in place from April 2016 need to be very careful of what items they decide not to report. If these expenses (or benefits in kind) turn out to be taxable then there will be a liability; and that liability will be with the employer.