CIPP response to the HMRC consultation on the exemption for paid or reimbursed expenses

29 August 2014

The CIPP has submitted its response to the HMRC consultation on the exemption for paid or reimbursed expenses. The exemption would remove the need to either apply for a dispensation or report such payments on a P11D.The research was conducted through an electronic online survey circulated to CIPP members to which there were 104 responses.

The key findings from the full response are:

· CIPP members welcomed the proposed “models” of acceptable record keeping and checking processes and wouldn’t feel disadvantaged if their particular circumstances were not covered;

· using a salary sacrifice arrangement to pay expenses is not common practice;

· custom scale rates are not widely used, with only 10% of respondents having applied for them;

· 50% of those who have used custom scale rates believe they would be disadvantaged if they were to be withdrawn. Industries most affected by their withdrawal would be airlines, sales and those sending workers abroad;

· only 18% of all respondents believe that retaining custom scale rates would bring added complexity for those who do not use them;

· those already using custom scale rates are in favour of self-certifying a sampling exercise;

· none of the respondents were micro businesses (or payroll bureaux acting on behalf of micro business clients) using scale rates to pay director expenses;

· almost 80% of respondents would welcome the opportunity to continue using their dispensation during a transition period. The majority of respondents suggested the transition period should last between 12 and 24 months;

· almost three quarters of respondents welcomed a delay between the legislation being introduced and the exemption coming into force, with most suggesting this being for a period of one year; and

· clear, concise and timely guidance is crucial to ensuring that all employers understand what their obligations will be once the legislation is in place.