Enter Your E-mail

TaxationWeb points out that by law, P11Ds may be filed as late as 19 July without penalty.

Many advisers (and no doubt others - particularly those who are longstanding TW readers) will be aware of the quirk in the rules relating to late filing penalties for "Benefit in Kind" Forms P11D.

HM Revenue & Customs requires that Forms P11D be submitted by 6 July, or else a penalty may be charged. The key word here is "may". The fact is that penalties will not be charged unless the P11Ds (and summary Form P11D(b)) are filed after 19 July.

This quirk in the rules is clearly proving troublesome for HMRC - see for instance the following nugget at 2012/13 Forms P11D(b) and Payslips - Employers in the Real Time Information (RTI) Pilot after HMRC twigged that they weren't going to get their forms posted out to certain employers in time:

"RTI pilot employers will not be charged late filing penalties if HMRC receives the 2012/13 P11D(b) by 19 July 2013".

Gosh, that's decent of them, given that the same applies to every employer.

(As an aside, anyone following HMRC's recommendation not to wait but to download a copy from their website may well find themselves frustrated: almost all links point to a "smart" online version which should - in theory - be capable of being filed online. Unfortunately, it doesn't work very well - see the "Ongoing Issues reviewed 1 June 2013" hidden away at Service Issues - Pay As You Earn (PAYE). Here's a tip for HMRC for 2013/14: don't remove a simple printable document and try to force people to use a "smart" form without first checking the replacement actually works...)

It seems even some of the more erudite tax publications have bought into "6 July or else".

Of course HMRC will point to several places in their guidance where they do say that penalties will not be charged unless the forms are submitted after 19 July. That much is accurate. The following, however, is rather less so:

Withdrawal of Extra-Statutory Concessions:

"Filing extension for form P11D(b)

By concession, HMRC does not issue penalties for late filing of P11D(b) returns provided they are received by 19 July following the end of the tax year. HMRC will withdraw this practice from 31 March 2013. P11D(b) returns filed after this date must be made by the deadline of 6 July following the end of the tax year in order to avoid penalties.

Background

The filing date for the P11D(b) return (Return of Class 1A National Insurance Contributions) is 6 July following the end of the tax year. Currently any employer who submits their P11D(b) return in time to reach HMRC by 19 July following the end of the tax year is not charged a late filing penalty. This treatment is provided for in our guidance (e.g. at paragraph 25 of leaflet CWG5 “Class 1A National Insurance contributions on benefits in kind – A guide for employers” [ but not every year, eh? ]) but there is no statutory provision which allows such an extension."

Really? I must have skipped class the day Statutory Instruments got demoted. Its probably the same day apostrophes were outlawed, on the basis there more trouble than their worth - a bit like distinguishing between tax and NIC!

Moving swiftly to the, er, legislation at SI2001/1004 - the Social Security (Contributions) Regulations 2001 and Regulation 81 in particular:

"Penalties for failure to make a return and incorrect returns

...

(2) Any person who fails to make a return... ...by the date which applies to him under regulation 71(1)... ...may be liable [to a penalty]..."

Regulation 71(1) and related schedules refer to the due date for the payment of Class 1A National Insurance Contributions - which, as everybody knows, is 19 July. Most of the time. (See Regs. 72/73).

I do hope that readers will take note of the statutory provision which underpins the welcome period of grace 'twixt 6th and 19th. Because I suspect that there's a real risk that, once HMRC find it, they will do away with it, if they think they can - probably on the grounds of "simplification". I should argue that simplification can work both ways: it would be just as simple to move the filing date from the 6th to the 19th. Or better yet, the end of July - that would be very simple. Certainly simpler than removing a concession which doesn't exist!

However, do note that an election to aggregate "beneficial loans" should strictly be lodged by 6 July, per ITEPA 2003 s 187(2). HMRC's guidance in its Employment Income Manual at EIM26192 says that such an election can be effected "by calculating the figures on the P11D return on that basis". (Which is why most people perhaps don't realise they've made it - although, given that it seems to be intended as an administrative easement for all concerned, and is effectively applied by default, it is perhaps unsurprising that it appears not to figure much in HMRC's thinking either).

One final point on P11D penalties: Regulation 81(5) also effectively caps the late filing penalty to no more than the Class 1A NIC liability itself. I have not seen cases where this cap would have effect but would be interested to know if any of these automatically generated penalties end up not being properly restricted - say because the taxpayer settles the provisional penalty before the P11Ds are submitted and the true sum is known. Hopefully, not another part of the legislation requiring "simplification".