NVQ/SVQ Level 3 in Payroll Administration Complete Year-End Procedures (CYE) (2003 standards) Friday 18 June 2004 (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 exam paper is in two sections. To be successful you will need to show competence 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 1.1 TASK 1.2 TASK 1.3 TOTAL SECTION 2 TASK 2.1 TASK 2.2 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 AAT 154 Clerkenwell Road, London EC1R 5AD, UK Tel: +44 (0)20 7837 8600 Fax: +44 (0)20 7837 6970 SA4038 CYE
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This page is perforated. You may remove it for easy reference. This Examination is in TWO sections. Section 1 Section 2 3 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 EACH section. You should spend about 135 minutes on Section 1 and 45 minutes on Section 2. There is blank space for workings on pages 17 and 22, but you should include all essential workings within your answer where appropriate. The workings on these pages will not be marked. INTRODUCTION Both sections relate to the company described below. You are the Payroll Officer for Express Pressings Ltd Dalton Road Basingstoke Hants RG34 6ST The Tax Office for the company is in Portsmouth and the reference is P60/815. 3
This page is perforated. You may remove it for easy reference. SECTION 1 OPERATIONAL TASKS You should spend about 135 minutes on this section. DATA The output below is an extract from some of the final payroll records for the tax year 2003/2004. Alana Merring Peter Adamson William Chrichton Spare for candidate s use Final Tax Code K175 461L Wk1 320T Date of starting 15/4/1991 22/11/2003 1/12/1985 Date of leaving 16/6/2003 National Insurance No. NP249645D ZW729184A YY459867B Gross pay for year including SSP, SMP and previous employment 47,862.34 21,024.16 7,388.89 Pay from previous employment Nil 12,961.66 Nil GAYE for year 4,260.00 Nil 300.00 Tax deducted for year including tax from previous employment 12,532.00 3,240.60 1,325.32 Tax in previous employment Nil 1,857.30 Nil Earnings at the LEL (where earnings reach or exceed the LEL) 4,004.00 1,336.00 1,002.00 Earnings between the LEL and the ET 611.00 204.00 153.00 Earnings between the ET and the UEL 26,325.00 6,522.00 5,558.00 Employee NIC in the 3,064.97 717.42 618.12 year Employer NIC in the 5,535.62 834.82 797.70 year SSP paid in the year 822.25 126.50 Nil SMP paid in the year Nil Nil Nil SMP reclaimed Nil Nil Nil 4
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 2003/2004. Use the P14 forms provided on pages 6, 7 and 8. 5
Express Pressings Ltd Dalton Road Basingstoke Hants RG34 6ST NP249645D Merring Alana 03 02 1956 F Portsmouth P 6 0 8 1 5 1 Procedures Way Woking Surrey WO20 5AB
Express Pressings Ltd Dalton Road Basingstoke Hants RG34 6ST ZW729184B Adamson Peter 15 07 1962 M Portsmouth P 6 0 8 1 5 49 Payroll Drive Basingstoke Hants RG10 6CD
Express Pressings Ltd Dalton Road Basingstoke Hants RG34 6ST YY459867B Chrichton William 22 11 1968 M Portsmouth P 6 0 8 1 5 75 Year End Road Alton Hants AL16 7DE
Task 1.2 Using the information given on page 4, complete the details in the summary section of the extract of Form P35 for the tax year 2003/2004. Use the form P35 on page 10. Note: Express Pressings Ltd cannot claim back any of its SSP. 9
This page is perforated. You may remove it for easy reference. DATA Alana Merring is the company s Chief Accountant. During the year 2003/2004 she received the following benefits in addition to her salary. You now need to take into account these transactions. During the year Alana travelled 8,753 miles in her own car on company business. The company contributed to her travel costs as follows: - An allowance of 35p was paid for every mile she travelled. - She received 350 towards her car insurance. - 500 was paid towards maintenance costs. Mileage allowances are paid one month in arrears. The total allowance paid to her in the year was 3,221.05. The company gave Alana an interest-free loan so that she could buy the car. She originally borrowed 15,000 over 5 years repayable at 250.00 a month. The balance of the loan at 6 April 2003 was 7,500.00 and all repayments due during the year were paid. The official rate of interest for the year to 5 April 2004 was 5% and this will not change. Alana s membership of her Accounting body of 235.00 was paid for by the company. The company moved her from the Glasgow office to the main office in April 2003 and she moved house permanently in July 2003. The company met the following expenses of the move: - Legal fees 2,350.00 - Selling fees 3,598.44 - Removals 2,650.00 - Purchase costs 1,500.00 - Settling in purchases 1,000.00 - Landscaping 750.00 The company pays for Private Medical Insurance that covers all employees and their families. In Alana s case this cost is 935.00 a year. Alana bought her desk top computer from the company when they replaced it. It had cost 850 when new, and was a year old when she bought it. The market value of it secondhand was 100 and she paid the company 250. No previous beneficial use had been reported. 11
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Task 1.3 (a) Calculate the benefit in kind values of the relevant items on page 11 using the P11D working sheets on pages 14-16 and 18-19. (b) Complete Alana Merring s P11D on pages 20-21. 13
Express Pressings Ltd Alana Merring P60 / 815 N P 2 4 9 6 4 5 D
Express Pressings Ltd Alana Merring P60 / 815 N P 2 4 9 6 4 5 D
You may use this page for your workings. 17
Express Pressings Ltd Alana Merring P60 / 815 N P 2 4 9 6 4 5 D
Express Pressings Ltd Alana Merring P60 / 815 NP249645D
You may use this page for your workings. 22
SECTION 2 - SHORT ANSWER QUESTIONS You should spend about 45 minutes on this Section. Aim to answer all 10 questions. Write in the space provided OR circle the correct answer. Do not show your answer in any other way. Task 2.1 When considering entries on the P11D, which of the following would be reportable? (a) House conveyancing provided to employees of a firm of solicitors Yes No (b) Stamp duty and other charges paid for by the firm of solicitors Yes No (c) Car servicing provided to employees of a newsagent s Yes No (d) Accountancy publications provided by a firm of accountants Yes No Task 2.2 Employees are often sent abroad on company business and are occasionally accompanied by their spouses. Describe TWO special tax rules which apply to this for each of the following: (a) employees (b) spouses 23
Task 2.3 The company held a summer party in July at a cost of 103 per person and a year-end party costing 84 per person. What sum would you report on the End of Year Expenses and Benefits form P11D? (a) 150 84 Nil 187 (b) Explain your answer. (c) What could you have done to avoid the need to complete P11Ds for every employee who went to the parties? Task 2.4 Before producing the End of Year return P14, list SIX basic checks you would carry out to avoid rejection of the return or questions by the Inland Revenue. You must provide TWO answers in respect of EACH of the following: (a) National Insurance numbers (b) National Insurance contributions (c) SSP and SMP payments 24
Task 2.5 A part-time employee has an annual salary of 8,250 and company private medical insurance of 450. Would the cost of medical insurance be reported on the employee s P11D? (a) Yes No (b) Explain your answer. Task 2.6 Two employees of the company received specialised counselling during the tax year. One was given counselling for a serious illness at a total cost of 1,500. The other employee s counselling cost 650, and formed part of his redundancy package of 25,000. What action will you take on the P11D at the year end? (a) (i) Report both payments. (ii) (iii) (iv) Report neither payment. Report the illness case only. Report the redundancy case only. (b) What requirements would you take into consideration when deciding what to report? Task 2.7 The Inland Revenue has published a series of deadlines for compulsory electronic filing of year-end returns depending on the size of the company. State TWO of the compulsory filing dates and what size of company they refer to. 25
Task 2.8 What are the statutory deadlines for submitting the following end-of-year forms? (a) Forms P35, P14 and P38A to Inland Revenue (b) Form P60 to employees 31 May 19 May 6 July 5 April 6 July 31 May 5 April 19 May (c) Forms P9D, P11D and P11D(b) to Inland Revenue 5 April 6 July 19 May 31 May (d) Form P11D or equivalent to employees Task 2.9 19 May 5 April 31 May 6 July What special requirements are there for directors pay and the year-end process for the following? (a) P11D (b) Directors loan/current account (c) Directors dividends, where they are also shareholders 26
Task 2.9, continued (d) National Insurance contributions Task 2.10 Employers have to report the value of company cars at year end using form P11D. (a) Describe how you would calculate the benefit in kind value of a company car for the P11D. (b) Explain how using alternative fuel vehicles might reduce the employer s costs. 27
Association of Accounting Technicians 154 Clerkenwell Road, London EC1R 5AD, UK Tel: +44 (0)20 7837 8600 Fax: +44 (0)20 7837 6970 06.04