HMRC contacts 5,500 taxpayers over their Benefit-In-Kind declaration.
5,500 taxpayers are set to receive letters from HMRC which ask why their data for the P11D submitted for the 2020-21 tax year doesn’t match their declaration for benefit-in-kind for the same tax year.
Employers who provide their employees with taxable benefits are required to report the value of these benefits on the P11D form or its online equivalent to HMRC no later than 6th July following the tax year during which the benefits were given. The employee should also receive a copy of this from their employer by the same date.
Employees who are required to submit a self-assessment tax return are expected to transcribe the P11D information accurately onto the employment section of their return document. Employers and employees who share a tax agent could find that this process is completed automatically (provided their software is sophisticated enough to connect the employee to their employee).
If the benefits have been payrolled to their full value and, therefore, taxed through the payroll then reporting the benefit information on the P11D is not necessary. However, the class 1A National Insurance Contributions on those benefits must be reported on the P11D(b) form.
HMRC are in the process of contacting 5,500 wealthy taxpayers to ask why their self-assessment data doesn’t match the benefit-in-kind information provided by their employer on the P11D. Tax agents will receive a copy of the letter from HMRC on the taxpayer’s behalf where appropriate.
HMRC is then allowing 28 days from the date of the letter to correct their tax return and provide prompt payment to avoid interest. Penalty charges at a later date for this are not currently ruled out by HMRC.