HMRC has completed a review of the Office of Tax Simplification's ()TS) initial proposals for the reform of employee benefits and expenses, and has agreed a number of quick wins to improve the current reporting environment in the short term.
The OTS said that it will be 'exploring and making proposals for simplification specifically in relation to HMRC administration and travel and subsistence issues. We will also continue to look at "big picture" issues which are relevant to the overall regime, as well as looking in more detail at accommodation and termination payments'.
The priority areas for the next three months, agreed with HMRC, include the implementation of voluntary payrolling of benefits in place of reporting benefits on forms P11D; HMRC to publish a list of benefits which it considers to be trivial, ideally with limits on the amounts; and a general improvement in the quality of guidance available across the HMRC website and What's New bulletins.
The OTS also expects HMRC to improve the general guidance on dispensations and PAYE Settlement Agreements (PSAs), including the availability of PSAs for overseas employees and non-domiciles. Another area which needs to be better publicised is the use of P46(Car) forms, which can be completed online but are often overlooked as the guidance is not clear.
HMRC is already looking at voluntary payrolling issues and is exploring what gradual changes can be phased in, alongside any legislative changes that may be necessary.
Once the initial quick wins are achieved, OTS wants to see an overhaul of form P11D, including improvements to the design, layout and guidance, particularly to stamp out the ongoing confusion over the fact that a different form is required if an employee earns less than £8,500.
As part of the 'big picture' issues, the OTS is keen to align tax and mileage rates over 45p and to overhaul car fuel benefit so it is based on what is actually put in the tank.
Although beyond its remit, OTS has also recommended that the DVLA [Driver Vehicle Licensing Agency] allows car fleet operators to buy multi-year road fund licences.The OTS will report back later this year, although it admits that 'whilst some of these proposals could be accused of only going part of the way in trying to respond to a particular problem where simplification is required, we consider that they would nevertheless improve the position in the interim period, pending the introduction of changes which can tackle the problem in full'.
The OTS progress report is available HERE