This exam paper is in two sections. You should try to complete all tasks in both sections.

Transcription

1 Exam NVQ/SVQ Level 3 in Payroll Administration Completing Year-End Procedures (CYE) 2003 Standards Friday 22 June 2007 (afternoon) Time allowed - 3 hours plus 15 minutes reading time Please complete the following information in BLOCK CAPITALS: Student member number Venue code Desk number Date Venue name Important: This exam paper is in two sections. You should try to complete all tasks in both sections. We recommend that you use the 15 minutes reading time to study the exam 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. We strongly recommend that you use a pen rather than a pencil. You may not use programmable calculators or dictionaries in the exam. Do NOT open this paper until instructed to do so by the Supervisor. CYE

2 Glossary of terms AVC COSR ET GAYE HMRC LEL NI NIC PAYE SAP SMP SPP SSP UEL Additional voluntary contribution Contracted out salary related Earnings threshold (for National Insurance contributions) Give as you earn HM Revenue & Customs Lower earnings limit National Insurance National Insurance contribution Pay as you earn Statutory adoption pay Statutory maternity pay Statutory paternity pay Statutory sick pay Upper earnings limit 2

3 Note: This page is perforated. You may remove it for easy reference. This exam paper is in TWO sections. You must show competence in both sections. So, try to complete EVERY task in BOTH sections. Section 1 contains 3 operational tasks and Section 2 contains 10 short answer questions. You should spend about 130 minutes on Section 1 and about 50 minutes on Section 2. There is blank space for your workings on pages 26, 27 and the back cover, but you should include all essential calculations in your answers. Both sections relate to the company described below. Introduction You work as a Payroll Officer for Fictitious Ltd. The pension scheme is a COSR. The company is a small company for the purposes of statutory payments and satisfies the HMRC rules for the Percentage Threshold Scheme. As a result, the company can reclaim its SSP payments. It can also recover 104.5% of all other statutory payments paid. 3

4 Note: This page is perforated. You may remove it for easy reference. Section 1 You should spend about 130 minutes on this section. Data The output below is an extract of some of the final payroll records for the tax year 2006/2007. Atif Majid Doreen Venick Connie Layton Final tax code 312L K98 503L Wk1 Date of starting 15 Jan Aug Sept 1999 Date of leaving 24 Nov 2006 National Insurance number TR379128C KL693726D FT162587A Gross pay for year including SAP, SMP, SPP, SSP and previous employment 38, , , Pay from previous employment Nil 22, Nil Pension scheme contributions 3, , Nil AVC contributions Nil 1, Nil GAYE for year 3, , Nil Tax deducted for year including tax from previous employment 6, , , Tax in previous employment Nil 7, Nil Earnings at the LEL (where earnings reach or exceed the LEL) 4,368 2,912 2,912 Earnings between the LEL and the ET Earnings between the ET and the UEL 28,505 19,003 10,564 Employee NIC in the year 2, , , Employer NIC in the year 3, , , Student loan payments 2,124 Nil 536 SSP paid in the year SMP paid in the year Nil 12, Nil SAP paid in the year Nil Nil Nil SPP paid in the year Nil Nil 4

5 Task 1.1 Using the information given on page 4, prepare the end of year returns form P14 for each employee for the tax year 2006/2007. Use the P14 forms on pages 6, 7 and 8. Note: The company is able to recover its statutory sick pay (SSP) and recovers 104.5% of all other statutory payments made. 5

6 FICTITIOUS LTD HOLMES TOWER FULCHESTER HANTS FU2 6GA BASINGSTOKE B TR C M MAJID ATIF

7 FICTITIOUS LTD HOLMES TOWER FULCHESTER HANTS FU2 6GA BASINGSTOKE B KL D F VENICK DOREEN

8 FICTITIOUS LTD HOLMES TOWER FULCHESTER HANTS FU2 6GA BASINGSTOKE B FT A F LAYTON CONNIE

9 Task 1.2 Using the information given on page 4, and on the completed P14 forms on pages 6, 7 and 8, complete the details in the summary section of the extract of form P35 for the tax year 2006/2007. Use form P35 on page 10. Note: The company claims back its SSP. 9

10 ATIF MAJID DOREEN VENICK CONNIE LAYTON 28,080.24

11 Note: This page is perforated. You may remove it for easy reference. Additional data Morwena Edwards, a company employee since 7 August 2006, enjoyed the following benefits which now need to be taken into consideration for the P11D reporting process. 1. For part of the year Morwena has had a company car that is also available for her private use. The details are as follows. The car is a Citroen C5 1.6HDi VTR Hatchback. The diesel engine has a capacity of 1,598cc. It cost 17,190 new when first registered and supplied to her on 7 August The CO 2 rating of the car is 139 and is approved to Euro IV emissions standard. All of the fuel for the car, both business and personal, is paid for by the company using a standard fuel card. Morwena has elected to make a 5,000 capital contribution in order to reduce the tax value of the car. 2. Morwena vacated her rented flat and moved 75 miles to new rented accommodation nearer the new job. The company funded the following relocation expenses: Loss of her deposit, 217, because of repair work needed on her old flat Temporary travelling and subsistence costs of 1,827.45, while searching for flats Temporary bed and breakfast accommodation - 1,200 Agency fee of 1,000 Deposit of 1,600 on new accommodation Moving furniture and effects - 1,750 including insurance Contribution of 500 towards purchases for her new flat 3. Morwena used her own personal credit card for expenses and on one occasion submitted her statement for the company to pay. This statement included a charge for a holiday costing which she has not reimbursed to the company. 11

12 Note: This page is perforated. You may remove it for easy reference. Task 1.3 (a) Calculate the benefit in kind values of the relevant items on page 11 using the P11D working sheets on pages 13 to 17. (b) Complete the P11D on pages 18 and

13 FICTITIOUS LTD MORWENA EDWARDS B18 / 150 M E S CITROEN C5 1.6HDi VTR Hatchback

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15

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17 FICTITIOUS LTD MORWENA EDWARDS B18 / 150 M E S NIL NIL NIL

18 FICTITIOUS LTD B18 / 150 MORWENA EDWARDS M E S F Citroen C5 1.6HDi VTR Hatchback

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20 Section 2 You should spend about 50 minutes on this section. Write in the space provided, tick the appropriate box OR circle the correct answer. Do not give your answer in any other way. Task 2.1 The company has 256 employees. (a) (b) (c) By which one of the following methods must the company submit its P14 returns? CD Rom Electronically Paper Phone By which date must the return be submitted? 6 April 19 April 19 May 31 July If the company pays electronically, by which one of the following dates must the final payment of PAYE be made? 6 April 22 April 6 May 22 May Task 2.2 (a) Which one of the following is the employee s copy of the P14? P11 P38S P60 P160 20

21 Task 2.2, continued (b) (c) By which date must the form referred to in (a) above be given to the employee? 22 April 30 April 22 May 31 May What would you do if one of the employees lost their form and requested a new one? Task 2.3 One of the returns which the employer must submit is the Return of Expenses and Benefits, form P11D. (a) (b) By which one of the following dates must an employer file the P11D returns? 22 April 31 May 6 July 31 August Which of the following would you include in your calculation to see if the employee exceeds the 8,500 limit for P11D or P9D? Tick a maximum of FIVE items. Salary Fees Corporation tax Expenses VAT on expenses Value of benefits Employer s NICs (c) (i) What is the purpose of the P11D(b) form? (ii) What employer liability does it show? 21

22 Task 2.4 The company offers loans to employees at a preferential interest rate. The following questions refer to beneficial loans. (a) (b) (c) Which ONE of the following is the criterion used to determine if the loan is to be reported to HMRC or not? The loan is used to purchase a car. The loan exceeds 5,000 at any time during the tax year. The loan is given at a reduced interest rate. The company has failed to obtain approval for the loan scheme. Which form is used to report any benefit in kind? P11 P11D P14 P38S How would you calculate the benefit in kind arising from the loan? Task 2.5 (a) (b) What is the name given to a Nil Liability Agreement arranged with HMRC in respect of expenses and benefits? PAYE Agreement Avoidance Agreement Dispensation Evasion State ONE way in which the agreement referred to in (a) above benefits the employer. (c) State ONE way in which the agreement referred to in (a) above benefits the employee. 22

23 Task 2.6 (a) Which section of form P11D is used to report the benefit in kind value of professional subscriptions, where these are paid directly to the professional body? (b) (c) Which ONE of the following describes the reason why payment of a professional subscription would not be classified as a benefit in kind? The payment is made directly to the professional body. It is necessary for the performance of the employment. It is necessary for employment and the professional organisation is approved by HMRC. State THREE steps you would take to avoid the need to report employees professional subscriptions payments to HMRC Task 2.7 The company car is still one of the most common benefits in kind. (a) How can the supply of cars which use low-emission fuels benefit the employee in terms of their car benefit? (b) How can the employer benefit from supplying employees with cars which use low-emission fuels? 23

24 Task 2.8 The company rewards long-serving employees with a gift. (a) (b) Which of the following types of gift has tax-free status? Cash Tangible article Holiday voucher What is the minimum number of years an employee must work for any gift to be tax free? (c) What is the maximum value of a gift which can be awarded per year before a tax liability is incurred? 24

25 Task 2.9 (a) (b) (c) Which ONE of the following describes the specific condition in which expenses might be non- taxable? Totally, normally and obviously in carrying out the employment Wholly, exclusively and necessarily for carrying out the employment Extensively, ordinarily and beneficially for carrying out the employment In the travel and subsistence rules, what is the maximum period allowed for a limited duration workplace? 12 months 18 months 24 months 36 months Give the limit for overnight personal incidental expenses without receipts that can be ignored for PAYE purposes: Per night in the UK Per night overseas Task 2.10 One of the company s directors finds that you have submitted a P11D report for his benefits, even though his fees were only 6,100 for the year and the total value of his benefits in kind was only 2,000. (a) (b) Has a mistake been made in submitting the director s P11D? Yes No Which ONE of the forms listed below would have to be filed for another employee a non director with the same level of income and expenses? P11D(b) P9 P9D P46 (c) Explain your answers in (a) and (b) above. 25

26 Note: You may use this page for your workings. 26

27 Note: You may use this page for your workings. 27

28 NVQ/SVQ qualification codes Payroll Administration Level 3 (2003 standards) - 100/2939/4 / G75 M23 Unit number (CYE) Y/101/8093 Association of Accounting Technicians (AAT) Clerkenwell Road, London EC1R 5AD, UK t: +44 (0) f: +44 (0) e: aat@aat.org.uk w:

29 For Assessor s use only Section 1 Section 2 TASK 1.1 TASK 2.1 TASK 1.2 TASK 2.2 TASK 1.3 TASK 2.3 TASK 2.4 TASK 2.5 TASK 2.6 TASK 2.7 TASK 2.8 TASK 2.9 TASK 2.10 TOTAL TOTAL

30 For Assessor s use only Section 1 Section 2 TASK 1.1 TASK 2.1 TASK 1.2 TASK 2.2 TASK 1.3 TASK 2.3 TASK 2.4 TASK 2.5 TASK 2.6 TASK 2.7 TASK 2.8 TASK 2.9 TASK 2.10 TOTAL TOTAL