Ahead of 6 July employers should be planning to complete and submit their P11Ds and PAYE settlement agreement (PSA) computations.
HMRC, through the increased use of technology and by modifying how computations need to be submitted in a pre-determined format, are getting greater visibility into the types of benefits and taxable expenses employers are providing to the employees. As the likelihood of HMRC intervention is inevitably going to increase ensuring your PSA is accurate and robust has never been more critical. Set out below are example of two risk areas which are high on HMRC’s radar.
Annual social functions
- Challenges on whether the costs were less than £150 per attendee at the event.
- Did you maintain a full list of attendees?
- Have you captured all of the costs connected with the event?
- Do you hold the event annually?
- How do you treat the costs connected with non-employees who attended the event?
Team away days
- Do you have an agenda for the event?
- How have you attributed the costs relating to the technical part of the away day?
- How are you identifying the costs connected with the social part of the away day?
What do employers need to consider?
Fundamentally it is important to maintain accurate records and in the absence of good quality information, it can prove difficult to deal with any HMRC enquiry.
Careful planning is therefore essential to:
- Maximise available exemptions
- Control costs
- Ensure correct classification of taxable items
Have a PSA Health check
We can assist employers and carry-out a PSA health check the advantages of which include:
- Indicating whether any costs you are incurring are taxable or non-taxable.
- Determine whether you are making best use of the exemptions available to you.
- Are you correctly identifying the costs for inclusion in your PSA?
- Is your PSA contract up to date and covers all of the categories which you need?
Most employers will look at the PSA data after the end of the tax year, which can prove costly as there may be ‘missing data’. This can result in employers taking the safest approach and simply including the cost in the PSA computation.
Recommendation
At HaysMac our Employment Taxes team can help you to:
- Plan ahead: Review upcoming events and budget accordingly
- Monitor regularly: Conduct quarterly reviews of PSA-related. This is particularly helpful where, for example, you incur regular, or a high entertainment spend
- Act early: Address discrepancies closer to when costs are incurred to avoid over-reporting.
Next steps
Contact a member of the Employment Taxes to arrange an initial call to discuss how a PSA Health check may be of benefit to you.
