Exam NVQ Level 3 in Payroll Administration Completing Year End Procedures (CYE) 2003 Standards Friday 7 December 2007 (afternoon) Time allowed 3 hours plus 15 minutes reading time Please complete the following information in BLOCK CAPITALS: Student member number Desk number Venue code Date Venue name Important: This exam paper is in two sections. You should try to complete every task 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. SA7570 CYE
GLOSSARY OF TERMS AVC COMP ET GAYE HMRC LEL NI NIC PAYE SAP SMP SPP SSP UEL Additional Voluntary Contribution Contracted Out Money Purchase Earnings Threshold (for National Insurance Contributions) Give As You Earn Her Majesty s 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
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 tasks and Section 2 contains 10 tasks. 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 21 and 22, but you should include all essential calculations in your answers. Both Sections 1 and 2 are based on the business described below. Introduction: You are a Payroll Officer for Fictitious Ltd. The company pension scheme is a COMP. Fictitious Ltd is a large company for the purposes of recovery of statutory payments. It is not permitted to recover any Statutory Sick Pay it has paid out. The company is permitted to recover only 92% of any Statutory Adoption, Maternity and Paternity Pay it has paid out. 3
Note: This page is perforated. You may remove it for easy reference. Section 1 Operational tasks You should spend about 130 minutes on this section. Complete all three tasks. Data The data below is an extract from the final payroll records for the tax year 2006/07. Sue Tamimi Richard House Kim Baudains Final Tax Code 508L K194 127L Wk1 Spare column for workings Date of starting 17 Apr 1997 11 Sept 2006 15 Jan 1985 Date of leaving 9 Feb 2007 National Insurance number PS497021B LT628851A MK913764B Gross pay for year including SAP, SMP, SPP, SSP and previous employment 35,176.82 67,786.67 41,285.71 Pay from previous employment Nil 26,586.67 Nil Pension scheme contributions 2,814.15 3,296.00 Nil AVC contributions 3,000.00 Nil Nil GAYE for year 300.00 Nil 3,420.00 Tax deducted for year including tax from previous employment 5,016.06 20,323.60 7,850.92 Tax in previous employment Nil 8,132.62 Nil Earnings at the LEL (where earnings reach or exceed the LEL) Earnings between the LEL and the ET Earnings between the ET and the UEL 4,368 2,548 4,004 667 392 616 28,505 16,625 24,615 Employee NIC in the year 2,262.23 1,772.85 2,828.23 Employer NIC in the year 2,972.30 4,727.11 4,693.21 Student loan deductions Nil 3,033 2,480 SSP paid in the year 1,443.03 Nil 798.57 SMP paid in the year 5,761.58 Nil Nil SAP paid in the year Nil Nil 2,830.10 SPP paid in the year Nil 217.70 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 2006/07. Use the P14 forms on pages 6, 7 and 8. 5
FICTITIOUS LIMITED HOLMES TOWER FULCHESTER HANTS FU2 6GA BASINGSTOKE B18 150 2007 PS 49 70 21 B F TAMIMI SUE 615002R 6
FICTITIOUS LIMITED HOLMES TOWER FULCHESTER HANTS FU2 6GA BASINGSTOKE B18 150 2007 LT 62 88 51 A HOUSE RICHARD M 615002R 7
FICTITIOUS LIMITED HOLMES TOWER FULCHESTER HANTS FU2 6GA BASINGSTOKE B18 150 2007 MK 91 37 64 B BAUDAINS KIM F 615002R 8
Task 1.2 Using the information given on page 4 and your interpretation of this on the P14s on pages 6, 7 and 8, complete the details in the summary section of the extract of Form P35 for the tax year 2006/07. Use the form P35 on page 10. 9
Part 1 Summary of employees and directors If you are sending your form P35 and all of your forms P14 on paper you must a) list each employee or director for whom you have completed a form P11 Deductions Working Sheet (or equivalent record). If you have more than ten entries, please prepare P35(CS) Continuation Sheets b) ensure that all forms P14 are enclosed with this return. If some or all of your forms P14 are not enclosed with this return because they are being sent by Internet, Electronic Data Interchange (EDI) or magnetic media, there is no need to complete the 'Part 1 Summary of employees and directors' section of this return. Instead you must begin by completing boxes 3 and 6 of the 'Part 2 Summary of payments for the year' section below. Employee s name Put an asterisk ( * ) by the name if the person is a director SUE TAMIMI RICHARD HOUSE KIM BAUDAINS National Insurance contributions (NICs) Enter the total NICs from column 1d on form P11. Write 'R' beside any minus amounts. Income Tax deducted or refunded in this employment. Write 'R' beside an amount to show a net refund. Guidance notes Some useful hints are given below. For step-by-step guidance refer to the Help section on Page 1. If any of the boxes do not apply to you, please leave them blank. If you make a mistake and record the wrong entry, draw a line through the entry so that it can still be read, and record the correct figure alongside. ed amounts 9 nt 10 ns 3 11 1256 30 850 2016 30 2106.30 Page 2 Page 3 Part 2 Summary of payments for the year Statutory Sick Pay (SSP) recovered Statutory Maternity Pay (SMP) recovered NIC compensation on SMP 14 Statutory Paternity Pay (SPP) recovered NIC compensation on SPP 16 Statutory Adoption Pay 17 (SAP) recovered NIC compensation on SAP 18 Funding received from HM Revenue & Customs to pay SSP/SMP/SPP/SAP see Note 4 Total NICs shown above after deducting amounts marked 'R' Totals from P35(CS) Continuation Sheets Statutory payments recovered 12 13 15 Total of boxes 12 to 18 19 20 NICs 1 Total Tax shown above after deducting amounts 4 marked 'R' 2 Totals from P35(CS) Continuation Sheets 5 Total NICs 1 + 2 3 Total Tax 4 + 5 see Note 2 see Note 2 Total NICs and Tax 3 + 8 Total Student Loan deductions see Note 3 9 + 10 19 minus 20 11 minus 21 see Note 5 Advance received from HM Revenue & Customs to refund tax Total Tax 6 + 7 Combined amounts 9 10 11 21 22 6 7 8 Income Tax Note 1 Boxes 1 to 6 Enter 'R' beside any minus amounts. Note 2 Boxes 3 and 6 If you are not required to complete the 'Part 1 Summary of employees and directors' section you should begin by entering the respective NICs and Income Tax totals for all employees for whom you have completed a form P11 (or equivalent record). Note 3 Box 10 Note 4 Whole pounds only. Do not enter pence in shaded area. Boxes 12 to 18 Do not enter the totals paid. Only enter the amounts you are entitled to recover. You will find this in your P30BC Payslip Booklet or your own equivalent payment record. Note 5 Box 22 If box 21 is a minus figure then add box 21 to box 11 Note 6 See your Contractor s Annual Return, form CIS36, box F. Fill in boxes 28 and 29 only if you are a limited company that has had CIS deductions made from payments received for work in the construction industry. Deductions made from subcontractors see Note 6 Amount payable for the year 22 + 23 24 NICs and Tax paid already 25 Tax-free Incentive payment received during the year see Note 7 CIS deductions suffered Total of col E on form CIS 132 Revised amount now payable 27 minus 28 23 26 NOW PAYABLE 24 minus 25 and 26 27 28 29 41,722 27 Note 7 Box 26 If a Tax-free Incentive payment was credited to your PAYE payment record for this year, for having sent any previous year's returns electronically, enter the amount. If the Incentive was repaid directly to you by cheque, leave this box blank. Do not include a payment with this form. If a payment is due, please make it immediately. See page 1 for notes on how to pay. Please now fill in page 4
Note: This page is perforated. You may remove it for easy reference. Data Aaron Lopez, a company director, has enjoyed the following benefits in kind, which you now need to take into consideration for the year end P11D reporting process. 1. For the whole tax year Aaron had a company car which was also available for private use. The details are as follows; The car is a Toyota Prius T4 1.5 VVT i. The petrol engine of 1,497 cc is backed up with an emission free self charging electric motor. It cost 22,355 when new and first registered and supplied to him on 4 March 2006. The CO 2 rating of the car is 104 g/km. No fuel is provided by the company. Aaron pays 100 a month towards the private use of the car. 2. Aaron received 4,680 in qualifying Childcare Vouchers towards the cost of childcare arrangements. 3. The company has loaned Aaron 27,000, interest free, repayable over 5 years at 450 a month. At 6 April 2006 the balance of the loan was 5,850. 11
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 18. (b) Complete the P11D on pages 19 20. 12
FICTITIOUS LIMITED AARON LOPEZ B18/150 296DIR L W 6 3 8 0 1 3 D TOYOTA PRIUS T4 1.5 VVT-i 04 03 2006
FICTITIOUS LIMITED AARON LOPEZ B18/150 296DIR L W 6 3 8 0 1 3 D
FICTITIOUS LIMITED B18/150 AARON LOPEZ 296DIR L W 6 3 8 0 1 3 D TOYOTA PRIUS T4 1.5 VVT-i 04 03 06 M
Note: You may use this page for your workings. 21
Note: You may use this page for your workings. 22
Section 2 Short answer questions 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. Answer all the questions on pages 23 to 27. Task 2.1 Payroll year end is governed by strict deadlines for each stage of the process. (a) By which one of the following dates must P14s be received by HMRC? 19 April 6 May 19 May 31 May (b) By which one of the following dates must P60s be received by employees? 30 April 31 May 30 June 31 July (c) Assuming the company has over 250 employees and pays its PAYE electronically, by which one of the following dates must the final payment of PAYE be received by HMRC? 19 April 22 April 30 April 6 May Task 2.2 Each year employees are issued with a P60. (a) Would you issue a P60 to an employee who left the company on 3 April? Yes No (b) What would be the position if the employee left on 7 April? (c) What action would you take if an employee claimed to have lost their P60 and wanted a new one? 23
Task 2.3 The company pays for a number of social events during the year. The main event was the summer dance costing 132.50 for each person who attended. A second event in the Autumn cost a further 27.50 with a Christmas dance following at a cost of 92.70 for each person who attended. (a) Outline the benefit in kind rules relating to the above events. (b) On the basis of your description above, which one of the following is the benefit value to be reported on the P11D? 27.50 92.70 120.20 132.50 (c) What would be the position if the company also gave a gift to each employee for Christmas? Task 2.4 (a) By which one of the following dates must the annual benefit in kind returns, P11D, be received by HMRC? 6 April 31 May 30 June 6 July (b) Describe how the company calculates its Class 1A NIC liability at year end. (c) When must the company account for its Class 1A NIC liability if it is paying electronically? 19 May 22 June 22 July 19 August 24
Task 2.5 The company is required to consider the benefit in kind report, P9D, when completing the year end process. (a) Under what particular circumstances will you use form P9D instead of a P11D? (b) Which form would you use for the company directors? Neither P9D P11D Depends on earnings Task 2.6 (a) How can an organisation avoid reporting certain benefits, in particular expenses, on employee P11Ds? (b) List TWO specific benefits that would qualify under (a) above. 1. 2. 25
Task 2.7 (a) List THREE circumstances where travel costs from home to permanent workplace that are reimbursed by the employer would be allowable for tax purposes? 1. 2. 3. (b) List TWO of the four types of vehicle which carry an HMRC Approved Mileage Allowance Payment value. 1. 2. Task 2.8 (a) Give ONE situation where travel is not strictly for work reasons but would still be allowable if paid by the employer. (b) Give TWO special considerations that are available for travel by registered disabled employees. 26
Task 2.9 Services Supplied is a particular benefit covered on the P11D at Section K. The company is a combined legal and accounting services supplier and provides a range of beneficial services to its employees. In respect of each one of the following services determine if a benefit in kind report is required and explain your answer in each case. (a) Printing work Benefit in kind report: Yes No Reason: (b) House conveyance Benefit in kind report: Yes No Reason: (c) Tax returns Benefit in kind report: Yes No Reason: (d) Computer repair work Benefit in kind report: Yes No Reason: Task 2.10 A company marketing roadshow has three employees travelling round major clients in a company-purchased luxury caravan. After it finishes, one of the employees buys the caravan from the company. It cost 18,750 to buy and fit out and at the end of the various events its market value is calculated as 10,500. The employee purchases it for 8,500 and the company pays 287.50 to transport it to her home. (a) Describe the tax rules for determining the value of the caravan as purchased by the employee. (b) What value will be entered on the P11D in this case? Nil 2,287.50 10,250.00 10,537.50 27
NVQ/SVQ qualification codes Payroll Administration Level 3 (2003 standards) 100/2939/4 G75M23 Unit number (CYE) Y/101/8093 527570 Association of Accounting Technicians (AAT) 12.07 140 Aldersgate Street, London EC1A 4HY, UK t: 0845 863 0800 (UK) +44 (0)20 7397 3000 (non-uk) e: aat@aat.org.uk w: aat.org.uk