Mileage

Updates to company car Advisory Fuel Rates

Posted by David on December 01, 2015
Expenses and benefits, HMRC, News articles / Comments Off on Updates to company car Advisory Fuel Rates

HMRC has updated its company car Advisory Fuel Rates (AFRs) with effect from 1 December 2015. The new rates apply from that date, though  employers do have an option of retaining the previous rates for one further month i.e. until 1 January 2016 if they prefer.

The new rates are shown below.

Engine size Petrol LPG Diesel
1400cc or less 11p 7p 9p
1,401 cc to 1,600cc 13p 9p 9p
1,601cc to 2000cc 13p 9p 11p
Over 2000cc 20p 14p 13p

Note: HMRC normally reviews AFRs on a quarterly basis, and these slight reductions to the previous rates are intended to reflect recent trends in fuel prices.

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HMRC Know Your Customer (KYC) Reviews – an update

Posted by David on November 17, 2014
Expenses and benefits, Flexible Benefits, HMRC, News articles, Status, Termination Payments / Comments Off on HMRC Know Your Customer (KYC) Reviews – an update

After going rather quiet on the ‘PAYE Audit’ front for a few years, HMRC has now introduced a new round of employer reviews, under the title of ‘Know Your Customer’ (KYC). Whilst these sound like a bit of a cosy chat, we should not overlook the reality – that for all intents and purposes these are simply PAYE Audits aka Employer Compliance Reviews, in another guise.

The ‘KYC’ programme is initially being rolled out by HMRC’s Large Business Service (LBS) teams i.e. those offices who deal with the largest employers in the country. However this is no surprise: HMRC invariably follows the ‘law of diminishing returns’ when undertaking Employer Compliance work, i.e. the larger employers will always be first in line, and things then gradually work their way down to medium and smaller-sized structures.

KYC reviews initially involve a high level review of the employer’s policies. This may happen before or after an initial KYC meeting with HMRC. From there we can expect HMRC to focus in on what it perceives to be the main areas of risk. Whilst those areas will vary depending on the worker profile, experience suggests that HMRC will always wish to consider the following common risk areas:

  • Employment status: recent changes to the employment agency or ’employment intermediary’ rules seem to have re-focussed HMRC’s minds on the risks associated with temporary workers, self-employed, and limited company engagements.
  • Termination payments: businesses that have seen substantial staffing changes can expect HMRC to take a particular interest in severance packages paid, with the usual focus on Pay in Lieu of Notice and any other payments on termination potentially arising from the contract (rather than simply from the severance).
  • Company expenses policies: relevant policies include those applying to company vans, company cars and private fuel (the last one is a particular HMRC favourite as this represents an all or nothing benefit when linked to company vehicle use).
  • Flexible benefits and salary sacrifice: HMRC will be especially interested in any aspect of the scheme which has not already been cleared fully by HMRC on a ‘cards face up on the table’ basis (or where the ‘goalposts have moved’ so that the scheme does not operate precisely in the way HMRC was told originally).

For those employers who also have ‘Senior Accounting Officer’ (SAO) reporting responsibilities, this provides HMRC with an additional angle of approach, i.e. within a KYC review HMRC may at the same time seek assurances on the validity of previous SAO reporting and the extent of internal checking undertaken to verify this. Indeed we are now seeing HMRC ask for copies of relevant internal audit reports – an approach not previously followed.

On the plus side, our own recent experience has indicated that, with a little advance planning it is usually possible for an employer to take and retain control of much of the process. If so the employer should be able to approach any KYC review with a fair amount of calmness, rather than simply hoping for the best, and then having to ‘fire-fight’ when issues later arise.

If you require assistance in dealing with a forthcoming KYC review or in relation to any other Employer Compliance matter, please contact the ET4B team.

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Car or Van – can you tell the difference?

Posted by David on December 17, 2013
Expenses and benefits, News articles / Comments Off on Car or Van – can you tell the difference?

The tax treatment of company cars is significantly different from company vans. From an income tax perspective, company cars are subject to relatively high charges based on the list price (rather than actual value) and CO2 rating of the vehicle, and company car fuel remains an ‘all or nothing’ benefit, which is becoming more punitive (i.e. tax-ineffective) with each passing year.  Vans or ‘commercial vehicles’ on the other hand have, generally more lenient, fixed rate taxable benefits applied. These can even be reduced to NIL if the only private use is incidental or incurred on ‘ordinary commuting’. In addition the employer may be able to secure a VAT input tax deduction on the purchase in appropriate cases, significantly reducing the overall net vehicle cost.

Whilst this may encourage both employee and employer toward the ‘van’ rather than the ‘car’ route, it can be difficult to tell the difference between the two types of vehicles.  Please click on this link to obtain our free technical update news item on this topic.

If you require additional information please contact the ET4B team.

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ET4Bs Autumn 2011 Newsletter

Posted by David on November 01, 2011
CIS, Expenses and benefits, HMRC, National Insurance, News articles, Payroll / Comments Off on ET4Bs Autumn 2011 Newsletter

015_ET4B Autumn 2011 Newsletter

This Newsletter provides an update on the RTI proposals, VAT on salary sacrifice, third party benefits and much more.

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ET4Bs Spring 2011 Newsletter and Budget update

Posted by David on May 01, 2011
Expenses and benefits, Flexible Benefits, HMRC, National Insurance, News articles, Payroll, Termination Payments / Comments Off on ET4Bs Spring 2011 Newsletter and Budget update

014_ET4B Spring 2011 Newsletter_Budget update

This Newsletter provides topical details of recently new and updated rules, including details of HMRC’s attempts to prevent ‘disguised remuneration’, its rather confused thinking on childcare tax reliefs, and the pension tax relief limitations.

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ET4B’s Autumn 2010 Newsletter

Posted by David on November 01, 2010
CIS, Expenses and benefits, HMRC, National Insurance, News articles / Comments Off on ET4B’s Autumn 2010 Newsletter

013F_ET4B Autumn 2010 Newsletter

This Newsletter includes details of recent announcements to pensions contributions tax relief, and a new potential avenue for NIC repayment claims.

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