The CIOT has responded to the consultation on aligning the dates by which benefits-in-kind provided to an employee by an employer (or third party) must be ‘made good’ in order to reduce (usually to nil) the value of the benefit-in-kind subject to tax and NICs.
Currently there is a lack of consistency between the dates for making good in respect of benefits-in-kind such as living accommodation, company cars and fuel, employers meeting PAYE liabilities under Section 222 ITEPA 2003, etc. The government has, therefore, proposed that making good should take place by the end of the tax year for most benefits-in-kind unless there are practical difficulties in doing so, in which case, the government proposes that the making good must be made by 1 June following the end of the tax year (except in the case of Section 222 where there are no proposals to change the existing 6 July deadline).
The CIOT comments, in principle, the idea of having consistency across the dates for making good on benefits-in-kind and thinks that the fairest and simplest approach would be to have a common date that is already familiar to employers and employees.
There are practical difficulties that can arise in certain cases from a requirement to make good before the end of the tax year. Accordingly, we say that there should be a common post tax year end date, regardless of the type of benefit-in-kind and whether or not it has been payrolled.
We therefore recommend an across the board making good date of 6 July following the end of the tax year, except for beneficial loans where Section 191 ITEPA 2003 should be retained. This is the date by which P11Ds have to be filed and it also addresses the inconsistency with the Class 1A NIC liability payment date of 19/22 July highlighted in the consultation document.
The P11D deadline of 6 July following the tax year is firmly ingrained in all organizations. Historic practice has allowed for making good to be aligned with this date with the full knowledge of HMRC. This is entirely logical and sensible ie the consequence of not making good means there will be a P11D reporting requirement. It is also consistent with existing legislation on making good and PSA calculations as well as current practice. It is therefore logical that the making good deadline should be 6 July.