P11D Deadline passed. How to correct and return tax?

[majamalan]

Hi

My LTD company was formed in Aug 2018.

I've missed the deadline to report my Benefit in Kind (BiK) P11D for the 2018-2019 tax year, for myself as the director. I'd paid for my own gym subscription through the company. Now I'm not able to declare the BiK for that tax year. But the company accounts and tax return is due. So how do I go about declaring or accounting for the BiK?

And for the future, can I payroll this BiK? The company pays direct to the gym. So can I payroll it for NIC purposes and submit a P11D at the end of tax year, so that the employee/director (i.e. myslef) pay relevant taxes on it by declaring it in my self-assessment?

I look forward to your replies.

[robbob]

Missing p11d benefit deadline can be ridiculously expensive as the default fine is £100 per month late minimum for fisrt 12 months - thankfully it appears that penalties are capped at 100% of class 1a which will probably be your saving grace.

You could try and appeal advising you were tolld this item was tax deductible but where not told about the sting in the taail of the benefits issue - hmrc will probably knowing themn laugh in your face and deny your appeal - no harm in trying though.

You can take the more contraversial/risky route of actively allocating payments to directors loan account and ensuring your loan account is in credit - thats an option best discussed with your accountant.

You can payroll the bik - but you still have to do the p11d so that doesnt really sole anything for you - just makes the payroll more complicated - you can go down that route if you choose though.

[majamalan]

Couple of questions:

1. Do we have to submit a P11D every tax year? What if there's nothing to declare? How does HMRC know if we are required to submit the form?
2. If I don't tell HMRC about my missed P11D for 2018-2019, how do I account for the gym subscriptions in my accounts, yet due to be submitted?
3. It sounds like BiK would be simply an undesired complication for my small company. Am I not best to avoid it all by not paying any BiKs through the company? Just stick to company costs and deal with my personal affairs through my salary. Right?

thankfully it appears that penalties are capped at 100% of class 1a which will probably be your saving grace.

What is the cap value?

You can payroll the bik - but you still have to do the p11d so that doesnt really sole anything for you - just makes the payroll more complicated

I'm using the Basic PAYE tool for my payrolls. It only appears to have BiK for a company car. How would I payroll BiK for gym subscriptions? Or do I have to use a commercial payroll software instead?

[bd6759]

Avoid it all by charging the cost to your DLA. No benefit. No tax. No NIC. No penalties.

[darthblingbling]

Assuming of course you keep the DLA below £10k

[majamalan]

Is there any paperwork involved in crediting/debiting the Directors Loan Account (DLA)? Do I have to file something with the company house every time something is charged against the DLA?

[darthblingbling]

Think this is where having a good accountant pays dividends

[bd6759]

The account doesn't even need to be good. Mildly competent is sufficient.

The DLA is a bookkeeping account. It is where you record all of your personal transactions with the company. You do record these somewhere?

In the case of your gym subscription, the current entries are CR Bank, DR Gym. You would clear that by CR Gym, DR DLA. In future its simply CR Bank, DR DLA. That is assuming you keep accounts at all.

The gym sub does not feature in the company accounts.

[majamalan]

The account doesn't even need to be good. Mildly competent is sufficient.

The DLA is a bookkeeping account. It is where you record all of your personal transactions with the company. You do record these somewhere?

In the case of your gym subscription, the current entries are CR Bank, DR Gym. You would clear that by CR Gym, DR DLA. In future its simply CR Bank, DR DLA. That is assuming you keep accounts at all.

The gym sub does not feature in the company accounts.

Yes, I'm using the free Wave cloud software (waveapp.com) for my bookkeeping. It is American but its got very good features and to my liking totally free.

So are you suggesting that I log in the payments to my gym as payments to the Director's Loan Account in the bookkeeping software. And when I generate the balance sheets and end of year reports, it should state whether or not and by how much the DLA is in credit/debit when I return my accounts.

So what happens if the DLA is in debit? Do I have 9 months to pay it off before I have to pay 32% tax on its value to the HMRC. Or am I confusing different things?!

[bd6759]

Yes. DLA is a balance sheet item.

Presumably your salary or dividends are CR to the DLA, but as long as any overdrawn amount is cleared within 9 months there is no s455 tax issue.