Benefits and Expenses Sub Group
Minutes of Meeting 17 January 2008
Attendees:
Mark Groom (MG) - CIOT
Bob Cope (BC) - ACCA
Steve Clarke (SC) - CBI
George Northall (GN) - CBI
Elaine Gibson - IPP
Norman Green (NG) - BCS
Shaun Healy - CBI
David Heaton - ICAEW
Jackie Petherbridge (JP) - FSB
Sue Walton (SW) - HMRC
Don Macarthur (DM) - HMRC
Peter Seedhouse - HMRC
Elizabeth O’Donnell (EO) -
Leonora Robertson (LR) - HMRC
Steve Dodd - HMRC
Su Barnett - HMRC
Paul Harris (PH) - HMRC
1. Welcome and apologies
SW welcomed all attendees.
2. Minutes of meeting held 17 October 2007
The minutes of the meeting on 17 October were agreed.
Matters arising
Homeworking - EO had distributed the minutes of the homeworking sub group to all umbrella group members.
3. Payrolling
The HM Revenue & Customs (HMRC) consultation document (condoc) for payrolling was published on 13 December and the consultation will run until 17 March. This meeting was the first opportunity to obtain face to face views on the document and LR advised that she was happy to answer queries and willing to attend any forum to discuss the various issues involved. EG advised that the IPP survey running alongside the condoc was published on 14 January and IPP hope to get a significant number of responses to feed into the consultation.
There was an extensive discussion about the merits of introducing payrolling. Many felt payrolling should be voluntary. SC was not convinced that the changes would provide the savings envisaged and outlined some areas where he thought payrolling could add to the costs of employers. All felt there were a lot of issues to sort out, particularly around valuation of benefits and linking reporting to the tax year. A number felt that certain benefits would need to be excluded, eg beneficial loans and there would be difficulties around directors’ loan accounts.
As part of the consultation exercise, HMRC are also seeking views on abolishing the £8,500 threshold. Whilst abolishing the threshold is linked with the payrolling consultation and would be helpful in introducing payrolling, this proposal is not tied to the payrolling timetable or to its outcome. LR agreed that there were a number of issues to consider if the threshold was removed and these should be brought out as part of the consultation process. There was a discussion on who would be affected by the removal of the threshold and the implications for part-time employees. It was thought that there would be an increase in tracking requirements by employers if part-timers would now be included. DH asked if there was any scope to follow the Irish system and allow a de-minimis limit. He thought that there were some benefits that would not be cost effective to code out or expect the employers to track.
BC raised the issue of what records employers would be required to keep. He felt some payroll bureaux are not sufficiently sophisticated to produce information on different benefits. JP was concerned about changes that would be needed to be made to payslips and other pay related forms such as P45 and P60. LR agreed that they would need to be looked at and advised the meeting that policy for payslips rests with BERR. The meeting agreed that early dialogue with BERR on potential changes in legislation to amend what should be included on payslips was needed. LR agreed it was important to correctly identify the impact on employers assessing accurately both the introductory and ongoing costs. LR also encouraged attendees in their responses to the consultation not to think that all rules/forms/processes will remain the same as there will have to be a fundamental change if payrolling is to go ahead. Attendees all agreed to respond on that basis.
4. P11D issues
SD advised that any changes to P11D forms or processes will be aimed to mesh with payrolling until any final decision is made. At this stage possible amendments will be restricted to those that can take effect within three or four years. SD highlighted areas where he would appreciate input from the group and agreed to send out a note with the minutes.
The completion of P11Ds by employers and the effects on the coding of benefits were discussed. If employers put an end date on the P11D to advise that the benefit runs the full year, the benefit is treated as ceased; HMRC need to improve the guidance so this is not repeated. SD advised HMRC will issue tips and hints for benefits/expenses along the lines of the common errors information for EOY returns.
AP: SD to send out a note with minutes identifying input required from the group (done – see below). He will share the draft of tips and hints with this group when available.
5. Overseas allowances
EO advised that HMRC intended to publish the rates on the Internet shortly and asked if the group would review the draft guidance before we do so. She acknowledged that the deadline was tight but would appreciate any responses by 25 January 2008 if possible to enable publication in early February.
AP: EO to issue draft guidance to group by the end of the week.
6. Late night taxis
MG had raised a query over the definition of the requirement to work late. LR advised that the guidance published on 7 January 2008 addressed this issue and confirmed that it was down to the employer‘s need for the employee to stay late and not a choice made by the employee. SC was concerned about the difficulties an employer would have keeping records that proved the requirements were met, and LR agreed there was some need for pragmatism. The relevant legislation however does state there has to be some requirement to stay later than normal and therefore employers needed to be able to show that they had processes in place that gave assurance that the exemption was due.
7. Any other business
Medical checks update
The consultation has now finished and HMRC are looking at the replies. When Ministers make a decision on the way forward, new guidance will be published.
It was agreed that health screenings when working with hazardous chemicals fall within s336 and PH confirmed that clarity on this issue would be part of the expansion of the EIM.
Homeworking
SC queried HMRC’s views on travel expenses for homeworkers who occasionally visit what was their employer’s place of work. PS advised that the normal rules apply and a decision on what was a temporary/permanent place of work would be governed by the facts of the case. This was covered in the Tax Bulletin article on homeworking and there were relevant examples in the Booklet 490, although these did not specifically address homeworkers. SC felt that more information on homeworking in the 490 would be helpful. PS agreed to look at including specific guidance on homeworking in the next routine update. Following the sub group meeting on homeworking, HMRC was looking at improving its guidance on this area. However, this would best factored into the general review of HMRC’s guidance.
MG asked for clarification of Condition B in section 243 ITEPA (Support for Public Bus Services), which states that the service should be available generally to employees of the employer concerned. MG was concerned that if not all employees took up the availability of a bus service subsidised by their employer that the tax exemption would not apply for those that made use of the service. LR explained that for the exemption to apply the subsidised bus service had to be available to all employees, that did not mean that all employees had to or would need to use it. LR illustrated the point with the exemption for childcare vouchers, suggesting that while it is was unlikely that every employee would want or need to participate in a childcare voucher scheme offered by their employer; that didn’t mean the tax exemption wouldn’t apply for those that do. The important point is that the scheme is available to anyone that wants to participate; the same principle could be applied to the exemption for a subsidised bus service. The fact that someone is a homeworker is irrelevant.
MG had a query on post retirement benefits which is not covered by the group but SD agreed to arrange a response if MG would contact him directly.
Date of the next meeting will be 17 April 2008.
Note from Steve Dodd about input to P11D process
HMRC will revive the discussion last year about the way that data can be submitted in list format. There were issues arising from data security, but HMRC would still like to work with employer representatives to see what improvements could be made for 2007-08 returns. One of Steve’s team will contact the original group within the coming week. The email will be copied to others in this group as well.
HMRC would like to better understand what information passes between benefit providers (eg healthcare suppliers or fleet managers) and employers. What are the expectations and issues on both sides in giving information ultimately for reporting to HMRC about employees in receipt of benefits? Would a standard data set or HMRC expression of best practice be of use? SD would initially like to talk informally to a few benefit providers and employers who use them. If any member of the group can help, please get in touch with SD directly.
