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The form P11D(b) has been in the news recently, with the concession regarding late filing up to 19 September 2001 announced on the normal last date for filing for 2000-2001 – 6 July 2001.
This is all very well, but do readers consider that, in practical terms, it is possible for employers to separate the form P11D, which deals with income tax and Class 1 National Insurance contributions, and the form P11D(b), which deals with Class 1A National Insurance contributions?
(Query T15,853) – Payroll.
The form P11D(b) has been in the news recently, with the concession regarding late filing up to 19 September 2001 announced on the normal last date for filing for 2000-2001 – 6 July 2001.
This is all very well, but do readers consider that, in practical terms, it is possible for employers to separate the form P11D, which deals with income tax and Class 1 National Insurance contributions, and the form P11D(b), which deals with Class 1A National Insurance contributions?
(Query T15,853) – Payroll.
It will be recalled that form P14/60 is a swatch of three forms, of which the lower two receive impression copies of entries written on the top leaf. The top two copies go to the Inspector, who keeps the top one (P60) and sends the second one (P14) to the Contributions Agency. The bottom copy is for the taxpayer. In this way each party gets the information required, without anyone having to recopy it, and so take the risk of an error, in course of distribution. All the writing is done by the employer, after which it is simply a matter of document handling.
A like approach is made to form P11D but, as this runs to several pages, impression copying is unsuitable, and the return is subdivided into two documents. The (b) part is sent on by the Inspector to the Contributions Agency. However, the documents are separate parts, not separate returns. A concession allowing later filing of P11D applies also to P11D(b). If it did not, the system would collapse. – Man of Kent.
Although there have been suggestions to the contrary, my view is that section 98A, Taxes Management Act 1970 (penalties in relation to certain pay-as-you-earn returns) does not apply to National Insurance contributions returns. It is true that regulations are needed to apply section 98A, but these are PAYE Regulations under section 203, Taxes Act 1988. To my knowledge, no National Insurance contributions regulations invoke it. The penalty for a late Class 1A National Insurance contributions return (form P11D(b)) is imposed by Regulation 81(2), Social Security (Contributions) Regulations SI 2001 No 1004. It is true that the amount is the same as the penalty in section 98A, but there the similarity ends.
Indeed, there is an important distinction between the penalties in section 98A and Regulation 81(2). In section 98A there is no discretion as to the amount. Where applicable (as in the case of a late P35) the amount is £100 per month per group (or part group) of 50 employees. Full stop. The Regulation 81 penalty begins at the same amount but, importantly, in Regulation 81(8) the Board has the power to mitigate the penalty. So it can be reduced, and thus the two forms are to be regarded separately.
From the announcement made on 6 July, the Inland Revenue proposes to defer imposition of such penalties until 19 September. The internal note seen by John Newth and noted in Taxation, 5 July 2001 at page 354 therefore appears correct but incomplete. When 19 September comes, it would be nice to know whether the full penalty will be levied or some reduced amount (after all, the fixed penalty for a late P11D is hardly ever charged). Do I hear more appeals for a reasonable excuse? – Werneth.
Editorial note. This particular issue is still very much unresolved. Further correspondence received since John Newth's article 'Open Government' in Taxation, 26 July 2001 at page 414 has highlighted further issues. 'Werneth' has pointed out that the 'concession' was not, in fact, admitted by a press release. The only communication was on 6 July 2001 on the Revenue website under 'What's New'. Employers without access to the internet will not necessarily have knowledge of the 'concession'. Secondly a letter dated 10 April 2001 from an Area Director of the Inland Revenue to specified employers stated categorically that the 'concession' extended to forms P11D as well as P11D(b)s.
The same letter made the following remark:
'I will not consider that you have made a full return of all expenses and benefits until the form P11D(b) has been sent in. This cannot be accepted unless all forms P11D have been submitted either with the P11D(b) or sent in previously.'
