HMRC Employer Bulletin: August 2016
19 August 2016
HMRC have published the latest issue the Employer Bulletin, a must read for employers and agents to find out the latest information on payroll topics and issues.
There are as usual a variety of important and interesting articles in the latest bi-monthly bulletin. Below are 3 items worth highlighting:
Apollo Fuels judgment
Apollo Fuels had an arrangement whereby the company would lease second hand cars to its employees as opposed to providing them free and appealed against the decision to treat this as a benefit in kind. The First Tier Tribunal and the Upper Tribunal both found that the price paid under the leases was market value and consequently there was no benefit to the employees.
HMRC appealed to the Court of Appeal who concluded that a benefit in its ordinary sense has to exist before Chapter 6 applies (Chapter 6 is the shorthand for Chapter 6, Part 3 Income Tax (Earnings and Pensions) Act 2003 (ITEPA) – the chapter that contains the legislation for car benefits-in-kind). The case is now final.
The government announced changes to the company car, provided living accommodation and loan benefit in kind legislation in Budget 2016 that were effective from 6 April 2016. These changes ensure that the relevant benefit in kind legislation applies in the way the legislation applied before the Apollo Fuels judgment.
HMRC have produced guidance for compliance staff about how to handle open enquiry cases for up to and including the tax year ending 5 April 2016 where the Apollo Fuels judgment could be in point. This guidance covers both cars and vans and can be found in the Employment Income Manual.
In November 2015, as part of the introduction of the new exemption for paid or reimbursed expenses which replaced the dispensations regime, amendments were made to the Income Tax (Pay As You Earn) Regulations 2003 to remove the requirement for expenses payments to be reported on form P11D.
However, those amendments also inadvertently removed the requirement to report taxable mileage allowance payments and taxable passenger payments on form P11D. This was not the intention, as the new exemption for paid or reimbursed expenses was not intended to affect the tax treatment of mileage payments. Therefore a further amendment to those regulations was made in July to correct this error.
Statutory Payments Calculator
The Statutory Payments calculator should not be used when a mistimed payment has occurred in the relevant period as it will not use the correct divisor to calculate the average weekly earnings. Using the calculator in such cases will not produce the correct entitlement.
Where mistimed payments have occurred in the relevant period, employers should calculate entitlement manually in accordance with the guidance on GOV.UK.