In our February newsletter we highlighted HMRC’s change in stance relating to revocation of Dispensations. We have been contacted by a number of clients asking for further clarification, and the clarification of the risks they face.

In essence, HMRC have advised that they will now seek to revoke any Dispensation from the date it was granted where they feel “there is evidence of misrepresentation or negligence by an employer”, and examples include where a Dispensation application did not provide all the relevant information or if there has been a change in the way expenses or benefits are now being provided to employees, and HMRC were not notified of the change.

Whilst this is unlikely to affect the majority of employers, it is essential that employers regularly review their current Dispensation and the manner in which expenses and benefits are provided. If there have been variations, then HMRC should be made aware of the changes and the impact on reporting.

In addition, employers must review employees' expense claims to ensure that the Dispensation is still current in light of expenses  being reimbursed – as any expenses or benefits not included within the Dispensation (unless exempt by Statute) must be reported on an employee’s P11D. This can create further work for both employer and employee.

For assistance in updating Dispensations, or for reviewing employees' expense claims for tax compliance, please call Dave Grimley on 0845 659 0655 or email at dgrimley@adtax.co.uk.

This page was last updated on Tuesday, April 08, 2008.