Company Cars and Benefit in Kind Forms

I run a small business and we have a number of employees who use company vehicles for private travel and others who receive various expense payments. Can you advise me on the type of records we should keep for P11D benefit in kind purposes and what HM Revenue & Customs might target in an investigation?

1st May 2010

Small businesses are often targeted for in-depth reviews of their compliance systems and procedures by HM Revenue & Customs. When completing the employer year end forms P11D and P11D(b), you should pay careful attention to all expenses reimbursed to employees or directors, especially if any are in the name of an individual rather than that of the business.  In addition, any expenses paid directly by the business on behalf of an employee/director must be reviewed.

Unless you have an agreed dispensation in place with HM Revenue & Customs, you must include all travel, subsistence and entertaining expenses paid to employees and directors on the year end forms P11D, even if the expenses have been incurred for business purposes. If you are registered for VAT, the figures reported on the P11Ds records have to be VAT inclusive.

You should keep full mileage logs for every vehicle, whether owned privately or by the company as they can be requested by HM Revenue & Customs in an investigation.  You should also ensure that you keep separate figures for each car where there is a change during the year, or where more than one vehicle is available to an employee. The fuel benefit is an 'all or nothing' benefit, so if the business pays for any private fuel and is not fully reimbursed by the employee, the employee must accept the corresponding fuel benefit.

We would suggest you retain all records and information relating to payroll, benefits for six years, which is the period for which the HM Revenue & Customs has powers to investigate your business accounts.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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