Thursday 4 December 2003 (afternoon) EXAMINATION

Transcription

1 NVQ/SVQ Level 3 in Payroll Administration Complete Year-End Procedures (CYE) 2003 standards Thursday 4 December 2003 (afternoon) EXAMINATION Time allowed - 3 hours plus 15 minutes reading time Please complete the following information in BLOCK CAPITALS You must give your registration number below If you do not, your paper may not be marked AAT Registration Number Approved Assessment Centre Code Desk number Date Approved Assessment Centre Name Important: This examination is in two sections You must complete all tasks in both sections We recommend that you use the 15 minutes reading time to study the examination paper fully and carefully so that you understand what to do for each task However, you may begin to write your answers within the reading time, if you wish You may not use programmable calculators or dictionaries in the examination Do NOT open this paper until instructed to do so by the Supervisor For Assessor s use only SECTION 1 TASK 11 TASK 12 TASK 13 TASK 14 TOTAL SECTION 2 TASK 21 TASK 22 TASK 23 TASK 24 TASK 25 TASK 26 TASK 27 TASK 28 TASK 29 TASK 210 TOTAL AAT 154 Clerkenwell Road, London EC1R 5AD, UK Tel: +44 (0) Fax: +44 (0) SA 3538 CYE

2 THIS PAGE IS INTENTIONALLY BLANK 2

3 This examination paper is in TWO sections Section 1 Section 2 This page is perforated You may remove it for easy reference 4 Operational Tasks 10 Short Answer Questions You have to show competence in BOTH sections You should therefore attempt and aim to complete EVERY task in BOTH sections You should spend about 120 minutes on Section 1 and 60 minutes on Section 2 Blank space for workings is available on pages 15 and 18, but you should include all essential workings within your answer, where appropriate Workings must not be written on the perforated pages Introduction Both sections relate to the company described below You are the Payroll Administrator for Five Star Couriers Ltd Guildford Road Fleet Hants GU21 8AB The Tax Office for the company is Southampton and the reference is P12/753 There is a Contracted-out Money Purchase pension scheme (COMP) in operation and all employees are encouraged to contribute to it The scheme contracted-out number is S Contributions are set at Employee s 8% and Employer s 18% An In-house Additional Voluntary Contribution (AVC) Scheme is available Contributions to this scheme can be a percentage of pay or a fixed sum each month up to the maximum permitted under Inland Revenue rules The company does not qualify for recovery of SSP under the Percentage Threshold Scheme or for SMP under the Small Employer s Relief Scheme 3

4 SECTION 1 OPERATIONAL TASKS You should spend about 120 minutes on this section DATA This page is perforated You may remove it for easy reference The output below is from the final payroll run of the Marketing Team for the tax year 2002/2003 that ended on 5 April 2003 Kirsty Mannering Martin Quansah Petra Crittenden Spare for candidate s use Final Tax Code K L Wk1 586T Date of starting 23/5/ /8/1989 1/10/2002 Date of leaving 18/01/2003 National Insurance No YS165417C YY346921D YD527843A Gross pay for year 17, , ,57125 including SSP, SMP and previous employment Pay from previous Nil Nil 7,50000 employment Employee pension 1, ,21600 Nil Contributions for year Employer pension 3, ,73600 Nil Contributions for year AVC contributions for Nil year GAYE for year 1,12500 Nil Nil Tax deducted for year 3, , ,66394 including tax from previous employment Tax in previous Nil Nil employment Earnings at the LEL 3, , ,95000 (where earnings reach or exceed the LEL) Earnings between the LEL and the ET Earnings between the 13, , ,76100 ET and the UEL Employee NIC in the 1, year Employer NIC in the 1, , year Employee NIC rebate Nil Employer NIC rebate Nil SSP paid in the year Nil SMP paid in the year 2,41526 Nil Nil SMP reclaimed 2,22204 Nil Nil 4

5 Task 11 Using the information given on page 4, prepare the end of year returns form P14 for each employee for the tax year 2002/2003 Use the P14 forms provided on pages 6, 7 and 8 5

6 003 For help to fill in this form, Please write firmly to ensure your entries are clear on all three sheets see Employers Help Book, E10 spaces should be filled from the right-hand side P14 End of Year Summary Inland Revenue Office name Inland Revenue Office no and Employers PAYE reference Employers name and address SOUTHAMPTON P Insert copy of 2002/2003 P14 form here For employers use Tax Year to 5 April FIVE STAR COURIERS LTD GUILDFORD RD FLEET HANTS GU21 8AB Employees private address (if known) Expenses payments and benefits paid to directors and employees: Complete form P11D or P9D if appropriate and provide a copy of the information to the employee by 6 July See Employers Further Guide to PAYE and NICs for more details Date of birth in figures (if known) Day Month Year Employees details Sex "M" if Male, "F" if Female Y Y D D M M Y Y National Insurance number Surname Postcode First two forenames Works/payroll no etc National Insurance contributions in this employment ( Note: LEL = Lower Earnings Limit, UEL = Upper Earnings Limit ) Scheme Contracted-out Number (For Contracted-out Money Purchase schemes OR Contracted-out Money Purchase Stakeholder Pension schemes only) Employees contributions payable on earnings in 1c (before deducting employees NIC rebate in box 1f ) Total of employees and employers contributions payable Earnings above the Earnings Threshold, up to and including the UEL (whole s only) Earnings above the LEL, up to and including the Earnings Threshold (whole s only) Earnings at the LEL (where earnings are equal to or exceed the LEL) (whole s only) NIC table letter 6 p p Pay Tax deducted Please detach sheets and make separate bundles of National Insurance and Tax copies before despatch From col1a on P11 From col1b on P11 From col1c on P11 From col1d on P11 From col1e on P11 1a 1b 1c 1d p 1e p S S S S Student Loan Deductions in this employment From col1j on P11 p Statutory p Maternity 1h 1i Pay Statutory Sick Pay Total of employees and employers NIC 1f+1g p rebate due on 1b Total of cols1f +1g on P11 Pay and Income Tax details p 1f Employees NIC rebate to be deducted from contributions in 1e From col1f on P11 Tax Credits in this employment From col9 on P11 Enter "R" in this box if net refund In previous employment(s) Y Y Day Month Year D D M M Y Y Date of starting if during tax year to 5 April 2003 p Y Y D D M M Y Y In this employment Date of leaving if during tax year to 5 April 2003 Payment in Week 53: if included in Pay and Tax totals, enter "X", "54" or "56" here (See Employers Further Guide to PAYE and NICs) For official use p Total for year Final tax code Employees Widows & Orphans/Life Assurance contributions in this employment P14(Manual)( ) National Insurance copy BS 6/02 To Inland Revenue

7 003 For help to fill in this form, Please write firmly to ensure your entries are clear on all three sheets see Employers Help Book, E10 spaces should be filled from the right-hand side P14 End of Year Summary Inland Revenue Office name Inland Revenue Office no and Employers PAYE reference Employers name and address SOUTHAMPTON P Insert copy of 2002/2003 P14 form here For employers use Tax Year to 5 April FIVE STAR COURIERS LTD GUILDFORD RD FLEET HANTS GU21 8AB Employees private address (if known) Expenses payments and benefits paid to directors and employees: Complete form P11D or P9D if appropriate and provide a copy of the information to the employee by 6 July See Employers Further Guide to PAYE and NICs for more details Date of birth in figures (if known) Day Month Year Employees details Sex "M" if Male, "F" if Female Y Y D D M M Y Y National Insurance number Surname Postcode First two forenames Works/payroll no etc National Insurance contributions in this employment ( Note: LEL = Lower Earnings Limit, UEL = Upper Earnings Limit ) Scheme Contracted-out Number (For Contracted-out Money Purchase schemes OR Contracted-out Money Purchase Stakeholder Pension schemes only) Employees contributions payable on earnings in 1c (before deducting employees NIC rebate in box 1f ) Total of employees and employers contributions payable Earnings above the Earnings Threshold, up to and including the UEL (whole s only) Earnings above the LEL, up to and including the Earnings Threshold (whole s only) Earnings at the LEL (where earnings are equal to or exceed the LEL) (whole s only) NIC table letter 7 p p Pay Tax deducted Please detach sheets and make separate bundles of National Insurance and Tax copies before despatch From col1a on P11 From col1b on P11 From col1c on P11 From col1d on P11 From col1e on P11 1a 1b 1c 1d p 1e p S S S S Student Loan Deductions in this employment From col1j on P11 p Statutory p Maternity 1h 1i Pay Statutory Sick Pay Total of employees and employers NIC 1f+1g p rebate due on 1b Total of cols1f +1g on P11 Pay and Income Tax details p 1f Employees NIC rebate to be deducted from contributions in 1e From col1f on P11 Tax Credits in this employment From col9 on P11 Enter "R" in this box if net refund In previous employment(s) Y Y Day Month Year D D M M Y Y Date of starting if during tax year to 5 April 2003 p Y Y D D M M Y Y In this employment Date of leaving if during tax year to 5 April 2003 Payment in Week 53: if included in Pay and Tax totals, enter "X", "54" or "56" here (See Employers Further Guide to PAYE and NICs) For official use p Total for year Final tax code Employees Widows & Orphans/Life Assurance contributions in this employment P14(Manual)( ) National Insurance copy BS 6/02 To Inland Revenue

8 003 For help to fill in this form, Please write firmly to ensure your entries are clear on all three sheets see Employers Help Book, E10 spaces should be filled from the right-hand side P14 End of Year Summary Inland Revenue Office name Inland Revenue Office no and Employers PAYE reference Employers name and address SOUTHAMPTON P Insert copy of 2002/2003 P14 form here For employers use Tax Year to 5 April FIVE STAR COURIERS LTD GUILDFORD RD FLEET HANTS GU21 8AB Employees private address (if known) Expenses payments and benefits paid to directors and employees: Complete form P11D or P9D if appropriate and provide a copy of the information to the employee by 6 July See Employers Further Guide to PAYE and NICs for more details Date of birth in figures (if known) Day Month Year Employees details Sex "M" if Male, "F" if Female Y Y D D M M Y Y National Insurance number Surname Postcode First two forenames Works/payroll no etc National Insurance contributions in this employment ( Note: LEL = Lower Earnings Limit, UEL = Upper Earnings Limit ) Scheme Contracted-out Number (For Contracted-out Money Purchase schemes OR Contracted-out Money Purchase Stakeholder Pension schemes only) Employees contributions payable on earnings in 1c (before deducting employees NIC rebate in box 1f ) Total of employees and employers contributions payable Earnings above the Earnings Threshold, up to and including the UEL (whole s only) Earnings above the LEL, up to and including the Earnings Threshold (whole s only) Earnings at the LEL (where earnings are equal to or exceed the LEL) (whole s only) NIC table letter 8 p p Pay Tax deducted Please detach sheets and make separate bundles of National Insurance and Tax copies before despatch From col1a on P11 From col1b on P11 From col1c on P11 From col1d on P11 From col1e on P11 1a 1b 1c 1d p 1e p S S S S Student Loan Deductions in this employment From col1j on P11 p Statutory p Maternity 1h 1i Pay Statutory Sick Pay Total of employees and employers NIC 1f+1g p rebate due on 1b Total of cols1f +1g on P11 Pay and Income Tax details p 1f Employees NIC rebate to be deducted from contributions in 1e From col1f on P11 Tax Credits in this employment From col9 on P11 Enter "R" in this box if net refund In previous employment(s) Y Y Day Month Year D D M M Y Y Date of starting if during tax year to 5 April 2003 p Y Y D D M M Y Y In this employment Date of leaving if during tax year to 5 April 2003 Payment in Week 53: if included in Pay and Tax totals, enter "X", "54" or "56" here (See Employers Further Guide to PAYE and NICs) For official use p Total for year Final tax code Employees Widows & Orphans/Life Assurance contributions in this employment P14(Manual)( ) National Insurance copy BS 6/02 To Inland Revenue

9 Task 12 Using the information given on page 4, complete the details in the summary section of the extract of Form P35 for the Tax Year 2002/2003 that ended on 5 April 2003 Use the form P35 on page 10 9

10 Insert copy of form 2002/2003 P35 here 10,

11 Task 13 Using the information given on page 4, complete the account extracts for the tax year 2002/2003 on pages 12 to 14 11

12 PAYROLL CONTROL ACCOUNT 31/3/2003 Bank 31/3/2003 Gross Wages 31/3/2003 Income Tax 31/3/2003 Employer s NIC 31/3/2003 Employee NI 31/3/2003 Employer s Pension 31/3/2003 Employer NI 31/3/2003 Employee Pension 31/3/2003 Employer Pension 31/3/2003 AVC Payments 31/3/2003 GAYE Payments PAYE/NIC CREDITORS ACCOUNT 31/3/2003 Payroll Control PAYE 31/3/2003 Payroll Control Employees NIC 31/3/2003 Payroll Control Employer s NIC _ 12

13 PAYROLL ACCOUNT 31/3/2003 Gross Payroll 31/3/2003 Employer NIC 31/3/2003 Employer Pension _ BANK ACCOUNT 31/3/2003 Payroll Control Net Wages _ GAYE ACCOUNT 31/3/2003 Payroll Control GAYE _ 13

14 PENSIONS ACCOUNT 31/3/2003 Payroll Control Employee Pension 31/3/2003 Payroll Control Employer Pension AVC ACCOUNT 31/3/2003 Payroll Control Employee AVC _ 14

15 You may use this page for your workings 15

16 DATA You have received the following memo from Colin Evans, the Sales Manager for the company, regarding travel and subsistence MEMO To: Payroll Administrator Subject: Travel and Subsistence From: Colin Evans Date: 23 April 2003 Sales Manager Sales staff travel considerable distances in their jobs I need to know how the reimbursement scheme is treated for tax purposes All employees use their own vehicles for business journeys, a business journey is the notional distance between Head Office and the place they are visiting The company pays the following sums to reimburse employees for business journeys and any other costs incurred: 45p per mile for all business travel all parking charges on production of tickets any parking penalty charges if these occur outside the employee s control a fixed sum of 10 per day is paid for meals where the journey takes them too far from home or the Head Office Please confirm as soon as possible: What are the deadlines for reporting these items to the Inland Revenue for the tax year 2002/2003? How will employees be expected to meet any tax and National Insurance liability? What is the correct tax and National Insurance treatment of each item listed above? Colin Evans Task 14 Reply to Colin s memo using the memo paper on page 17 16

17 MEMO To: Colin Evans Subject: Travel and Subsistence Sales Manager From: Payroll Administrator Date: 25 April

18 You may use this page for your workings 18

19 SECTION 2 SHORT ANSWER QUESTIONS You should spend about 60 minutes on this Section Answer all 10 questions Write in the space provided OR circle the correct answer Do not show your answer in any other way Task 21 An employee was entitled to Children s Tax Credit during 2002/2003 and had a tax code of 579A throughout the year He has received a new code for the year 2003/2004 of 461L and wants to know if this is correct (a) Is the new code correct? Yes No (b) Explain your answer Task 22 The Inland Revenue has a form coded P38A (a) What is the purpose of form P38A? (b) What is the deadline for submission of the form to the Inland Revenue? 19 April 19 May 6 July 19 July 19

20 Task 23 The method of calculating the benefit in kind value of a company car changed for the P11D return for the tax year 2002/2003 Answer the following questions on the new form of calculation (a) Employees who drive more than 18,000 business miles in True False the tax year qualify for a discount (b) If the car is purchased it is the discounted price that is used True False to calculate the benefit value (c) The maximum price of a car for benefit purposes is True False 80,000 (d) A Diesel car meeting the new Euro IV emission standard True False carries a 3% penalty for tax purposes Task 24 Employers who provide their employees with training facilities have to consider whether or not they are required to report the costs as a benefit in kind derived from employment for those employees at the end of the tax year Which of the following would be reported as a benefit in kind? (a) The Surveyor attending a two-day course on new Yes No surveying software (b) Someone in the Accounts section training for the Yes No Certificate in Personnel Practice (c) The Payroll Administrator going to an update conference Yes No on Expenses and Benefits 20

21 Task 25 Employees occasionally take clients out to lunch or dinner as part of the client contact programme and it is considered to be part of the job (a) What must the company do to ensure employees can claim a deduction for their expenses? (b) Explain TWO of the rules for employees claiming tax relief for the cost incurred Task 26 At the end of the 2002/2003 tax year the employer discovers that a student who signed and submitted a P38S tax form has been put on tax code NT Assume the earnings exceed 5,000 in the year (a) Is the application of code NT correct? Yes No (b) What must the employer do at year end in relation to the above information? 21

22 Task 27 Some employees are not liable to pay National Insurance Contributions on any of their pay even if they are paid in excess of the Earnings Threshold (a) In what TWO circumstances would this occur? (b) What Certification would you expect to have in either situation? Task 28 In certain circumstances employers will have made payments of Statutory Paternity Pay during the tax year 2002/2003 There is no place on the end of year P14 or on the P35 reconciliation and declaration form for this payment How should such payments be reported for the year 2002/2003 only? Task 29 At its factory the company has a flat that forms part of the terms and conditions of the Security Officer who is required to live there as part of the job (a) Would you report the value of the flat on the P11D at year end? Yes No (b) Explain your answer 22

23 Task 210 The Inland Revenue will issue a dispensation for certain benefits to an employer where it is clear that no tax liability exists in specific circumstances The effect is that no tax is deducted at source neither is it reported on P11D at year end (a) Give TWO other specific examples of situations in which payments to employees are not taxed on the employee (b) Summarise the main features of a dispensation 23

24 Association of Accounting Technicians 154 Clerkenwell Road, London EC1R 5AD, UK Tel: +44 (0) Fax: +44 (0)