The P11D Pile-Up

Tuesday August 25, 2020

The COVID-19 pandemic has delivered a solid, painful gut-punch to most areas of the UK economy and community. Some of its effects have been easy enough to predict and prepare for, while others have been hitting people and businesses out of the blue. One thing that was particularly difficult to see coming was the way HMRC’s paperwork processing would be affected – and right now that’s causing problems for UK companies and employees.

Across the country, businesses and workers have been receiving incorrectly issue penalty warnings from HMRC over late filing of P11D and P11D(b) forms. Despite the necessary documents being submitted well within the 6th of July deadline, warnings are being sent out due to long delays in HMRC’s own processing times for paperwork covering employee benefits in kind. Where payments have been made by cheque, penalty warnings have reportedly been sent out even though those cheques have already been cashed.

A lot of the trouble stems from forms and payments being submitted by post. While it’s possible to handle benefits in kind paperwork digitally, many people and firms still opt for physical documents. Obviously, postal delays have been a factor during the pandemic, but the problem actually goes quite a lot deeper than that.

HMRC has been working flat-out to offer support for struggling people and businesses during the COVID-19 crisis, and the strain’s starting to show. Staff who would normally be sorting postal deliveries and handling P11D documents have been drawn away to help with coronavirus support. While completely necessary and basically unavoidable, this has left HMRC severely short-handed, leading to 8-week delays and blown deadlines.

To make matters worse, it’s not at all clear that even digital submissions are being handled in time to avoid automatic penalty notices being fired off. Those warning letters are sent automatically, without any real human intervention, regardless of whether the firms and employees affected have followed the rules correctly or not.

For people claiming their yearly tax returns from HMRC for work expenses, a paperwork pile-up at HMRC can be a particular problem. P11D forms are an important factor in many tax rebate claims, and are often used to alter employees’ tax codes, adjusting their whole tax situation. With the system choking on backlogged P11D forms, getting people’s tax codes sorted for the current year becomes a lot more challenging.

So far, HMRC has been keeping pretty quiet about these incorrectly sent penalty notices. However, the same principle applies here as for any other communication from the taxman. Even if you don’t know why you got it, even if you’re positive it’s a mistake, never ignore a letter from HMRC. If you think you’re being penalised when you’ve followed all the rules, give RIFT a shout and we’ll rush to the rescue. Be alert to the problem, make a noise if you’re affected and keep listening out for more Voices from the RIFT...

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