P87 2004 2005 Tax Form Online

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contact the technical advisory service via telephone on
020 7059 5920 or via e-mail at members@accaglobal.com

technical help
   The Technical Advisory Service is able to          State clearly that, in the auditor’s opinion,   answer
provide guidance to members on a range of             they have been prepared in accordance           FRSSE paragraph 18.12:
matters, including the applicability of               with the Companies Act 1985, and where             If a directors’ report is approved on or
auditing/financial reporting standards, tax           applicable, Article 4 of the IAS Regulation.       after 6 April 2005 then, for audited
legislation/practice and company law matters.         Section 235(2) dealing with the content of         companies, the report shall contain a
The Service also provides guidance on                 the audit report has been replaced. The            statement that, so far as each of the
interpretation of ACCA’s Rules of Professional        revised section is very similar; however, it       directors at the time the report is
Conduct and ethics issues generally. The              refers to accounts being prepared in               approved are aware:
Technical Advisory Service is not, however,           accordance with the relevant framework                  there is no relevant audit
designed to provide consultancy service.              (that is IAS or Companies Act) as opposed               information of which the company’s
                                                      to the Companies Act.                                   auditors are unaware
question                                                                                                      the directors have taken all steps
I understand that there are some changes to       A new section 235(2A) has been added. This                  that they ought to have taken to
the Companies Act 1985. Is there an impact        requires that the audit report:                             make themselves aware of any
on the format of the audit report?                    must be either unqualified or qualified                 relevant audit information and to
                                                      must include a reference to any matters to              establish that the auditors are
answer                                                which the auditors wish to draw attention               aware of that information.
There are some changes to the Companies Act           by way of emphasis without qualifying the
1985. The Companies Act 1985 (International           report.                                         The FRSSE requirement differs from the
Accounting Standards and other Accounting                                                             Companies Act 1985 requirement per S234ZA
Amendments) Regulations 2004 (2004 No.            The website below provides further information      (SI 2004/3322). The matter has been brought
2947) came into force on 12 November 2004         www.companies-house.gov.uk/infoAndGuide/            to the attention of ASB.
and will apply to accounting periods              accAuditReq.shtml.                                      The Companies Act requirement overrides
commencing on or after 1 January 2005.                                                                the FRSSE. So the requirement in paragraph
    Two new sub-sections (1A and 1B) have         question                                            18.12 FRSSE (see above) applies for periods
been added to the existing section 235 (1). The   The FRSSE (effective January 2005) states           beginning 1 April 2005 and not, as stated in
new sub-sections require the audit report to:     that all accounts approved after 6 April 2005       the FRSSE directors reports, approved on or
    State the framework that has been applied     must comply with the requirements of                after 6 April 2005. The first full year accounts
    in preparing the accounts (International      paragraph 18.12 (below). Is this correct?           for which the provision applies will be 31
    Accounting Standards (IAS) or Companies                                                           March 2006.
    Act).                                                                                                 ACCA has ensured a note detailing the
    Describe the scope of the audit and state                                                         point raised is sent with copies of the FRSSE
    the auditing standards that have been                                                             (effective January 2005) to any member
    applied.                                                                                          requesting a copy of the FRSSE from ACCA.

16                                                                                                               corporate sector review July 2005
question                                             a person has to supply the Inspector with     employees to claim tax relief for business
Can I use the FRSSE (effective January               a statement of the cases and                  expenses other than through a Self
2005) now?                                           circumstances in which payments of a          Assessment Tax Return. Additionally, if
                                                     particular character are made or benefits     employees use their own vehicles for business
answer                                               or facilities of a particular kind are        use, and their employer pays an allowance
Paragraph 19.1 states the FRSSE (effective           provided and                                  that is less than the statutory mileage rates,
January 2005) applies for accounting periods         the Inland Revenue has to be satisfied that   P87 enables the employees to claim mileage
beginning on or after 1 January 2005. It then        no tax will be payable by reference to the    allowance relief.
states “Earlier application is not permitted.”       payments, benefits or facilities mentioned        This tax relief can be claimed by letter, but
                                                     in the statement.                             form P87, which is four pages long, means
question                                                                                           that the employee is more likely to provide all
My company pays a variety of expenses for        Inspectors should issue a dispensation where      the relevant information required by the
employees. I have not applied for a              all the following conditions are satisfied:       Revenue.
dispensation from including expenses for              employees are reimbursed expenses that           The form can be downloaded from:
employees who are reimbursed expenses that            are deductible within Part 5 ITEPA 2003      http://www.hmrc.gov.uk/forms/P87.pdf
are deductible within Part 5 of the Income            claims to expenses are independently             Further guidance on dispensations can be
Tax (Earning and Pensions) Act (ITEPA)                checked and authorised                       found in the Inland Revenue leaflet IR69 –
2003. Therefore I have to complete a form             where possible claims are vouched            Expenses Payments and Benefits in Kind
P11D for each such employee. I am                     where advances of expenses are made,         which can be downloaded from:
concerned this may cause unnecessary                  the employer has procedures to ensure        http://www.hmrc.gov.uk/pdfs/ir69.htm
paperwork for a number of employees.                  they are fully accounted for, and any
                                                      excess repaid by the employee.
You should investigate for the future applying   The immediate problem may be solved by
for a dispensation.                              giving your employees a form P87 when
    Conditions to be satisfied:                  issuing them with their form P11D, now
Section 65 (1) to (4) ITEPA 2003                 available online. This form is for use by

corporate sector review July 2005                                                                                                                 17

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