Are you meeting HMRC’s requirements?
When P11D dispensations become invalid on 6 April 2016, HMRC introduced new legislation to exempt from PAYE tax/NIC business related expenses paid or reimbursed by an employer. The exemption only applies if HMRC’s new requirements are met.
Going forward, HMRC’s requirement is that employers must be able to evidence that governance and control processes are in place to support the business nature of the expenses incurred.
HMRC expect that all employers will:
- Have evidence that they have considered and identified their potential tax risks;
- Have processes and policies in place to manage those risks;
- Be able to demonstrate that those processes are reviewed and checked on a regular basis (10% of claims checked every 3-6 months)
- Be able to evidence that the risks are regularly re-evaluated in line with legislative changes or changes in business practice
Smith Cooper’s team of Employment Tax advisers are ideally placed to help your business meet HMRC expectations by using their ARMS approach to reduce the risk of unexpected future tax costs/penalties.
Assess – Carry out a high level risk assessment of your current processes and policies. If requested, additional reviews can be undertaken in respect of specific risks e.g. employment status, expenses etc.
Recommend – Provide verbal feedback on the day and, if required, a detailed written report highlighting potential risks and providing pragmatic recommendations and solutions.
Manage – Help you to manage the process by drafting policies and systems that are specific to your business needs and simple to operate.
Support – Provide continuing support, with timely updates on changes to relevant legislation and HMRC practice. Annual ‘healthchecks’ to ensure your processes remain valid and compliant. Always just a phone call or email away!
The ARMS review is often followed up with documenting an Employment Tax Risk Register. For further information see our Employment Tax Risk Register information sheet below or get in touch directly.
