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Exam
NVQ/SVQ in Payroll Administration Level 3 Completing Year-End
Procedures (CYE) 2003 Standards Friday 20 June 2008 (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 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
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2
Glossary of terms AVC Additional voluntary contribution COSR
Contracted out salary related ET Earnings threshold (for National
Insurance contributions) HMRC HM Revenue & Customs LEL Lower
earnings limit NI National insurance NIC National Insurance
contribution PAYE Pay as you earn SAP Statutory adoption pay SMP
Statutory maternity pay SPP Statutory paternity pay SSP Statutory
sick pay UEL Upper earnings limit
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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 135 minutes on
Section 1 and about 45 minutes on Section 2. There is blank space
for your workings on pages 26 and 27, 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.
• Fictitious Ltd is a small company for the purpose of statutory
payments. • The company is permitted to recover the full 104.5% of
any statutory adoption, maternity and
paternity pay it has paid out. • The company has a charitable
giving scheme which allows employees to make donations via an
HMRC approved agency.
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4
Note: This page is perforated. You may remove it for easy
reference. Section 1 You should spend about 135 minutes on this
section. Data The table below contains an extract of some of the
final payroll records for the tax year 2007/08.
Zoe Thrall Vic Juris Hansa Pancholi
Final tax code 522L K386 BR
Date of starting 13 August 2007 14 May 2007 15 October 1992
Date of leaving 18 January 2008
National insurance number MN169230A HT518590D GR145263A
£ £ £
Gross pay for year including SAP, SMP, SPP, SSP and previous
employment 18,080.65 52,108.54 82,500.00
Pay from previous employment Nil 7,901.53 Nil
Pension scheme contributions 1,084.84 2,652.42 4,950.00
AVC contributions 350.00 2,250.00 Nil
Charitable giving for year Nil 875.00 3,000.00
Tax deducted for year including tax from previous employment
2,243.92 14,409.10 16,401.00
Tax in previous employment Nil 2,186.50 Nil
Earnings at the LEL (where earnings reach or exceed the LEL)
3,016 3393 4,524
Earnings between the LEL and the ET 464 522 701
Earnings between the ET and the UEL 14,600 22,221 29,615
Employee NIC in the year 1,365.01 2,261.01 3,250.32
Employer NIC in the year 1,311.45 4,315.25 8,769.6
Student loan deductions 725 Nil Nil
SSP paid in the year 217.65 Nil 290.20
SMP paid in the year Nil Nil 9,356.56
SAP paid in the year Nil Nil Nil
SPP paid in the year Nil 225.50 Nil
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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
2007/08. Use the P14 forms provided on pages 6, 7 and 8.
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Fictitious Limited
Holmes Tower
Fulchester
Hants FU2 6GA
Basingstoke
B18 150
MN 16 92 30 A
Thrall
Zoe
F
2008
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Fictitious Limited
Holmes Tower
Fulchester
Hants FU2 6GA
Basingstoke
B18 150
HT 51 85 90 D
Juris
Vic
M
2008
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Fictitious Limited
Holmes Tower
Fulchester
Hants FU2 6GA
Basingstoke
B18 150
GR 14 52 63 A
Pancholi
Hansa
F
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Task 1.2 Using your 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 2007/08, determine the final payment to be
made to HMRC and show that payment in box 27. Use the form P35 on
page 10.
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Zoe Thrall
Hansa PancholiVic Juris
38,186 51
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Note: This page is perforated. You may remove it for easy
reference. Additional data Norma Benghiat has enjoyed the following
benefits in kind which you now need to take into consideration for
the year end P11D reporting process for 2007/2008. 1. For part of
the tax year Norma had a company car which was also available for
private use. The details are as follows.
• The car is a Lexus RX400h SE-L
• The petrol engine of 3,311 cc is backed up with two
emission-free, self-charging electric motors.
• The list price when new, first registered and supplied to
Norma on 6 August 2007 was
£44,415.00.
• A tow-bar was fitted to the vehicle prior to Norma taking
delivery. This cost £2,387.50 and was paid for by the company.
• The CO2 rating of the car is 194 g/km.
• All fuel is provided by the company using a fuel card.
• Norma made a capital payment of £9,415.00 towards the car.
2. Norma took advantage of the company private health insurance
plan where the average cost per
employee is £1,250.00. In addition, Norma added cover for her
family at a cost to the company of £1,750.00. Norma paid back 50%
of this additional cover to the employer.
3. When Norma took delivery of her company car she also bought
one of the old company cars which
were going to auction. The car had a list price of £23,450.00
when first used as a company car and its second-hand value prior to
sale was £5,250.00. Norma paid £3,500.00 to the company for the car
as this was the estimated auction price but she did not pay any of
the £278.62 paid by the company to have the car inspected,
subjected to a Vehicle and Operator Services Agency (VOSA) test,
and serviced prior to delivery to her.
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Note: This page is perforated. You may remove it for easy
reference. Task 1.3 (a) Calculate the benefit in kind values for
2007/2008 of the relevant items on page 11 using the
P11D Working Sheet 2 on pages 13 to 16. (b) Complete the P11D
for 2007/2008 on pages 17 and 18.
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Fictitious Ltd
B18/150
Norma Benghiat
D E 6 7 4 9 2 5 A123MAR
06 08 2007
Lexus RX400h SE-L
�
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Fictitious Ltd
B18 / 150
F
BenghiatNorma
T R 3 8 6 5 7 1 D
Lexus RX400h SE-L
070806
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Section 2 You should spend about 45 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
What actions must an employer have completed by the following
dates? (Choose ONE only for each date) (a) 22 April
□ Made the final, electronic, payment of PAYE to HMRC for the
previous tax year □ Supplied each employee with a P60 □ Collected
the non-taxable incentive payment for on line filing □ Submitted
completed P14s to HMRC (b) 19 May
□ Paid class 1A NICs to HMRC □ Supplied each employee with a
copy P11D □ Submitted completed P14s and P35 declaration to HMRC □
Made the final, non-electronic, payment of PAYE to HMRC for the
previous tax year (c) 31 May
□ Produced copies of P11D forms □ Supplied each employee with a
P60 form □ Submitted P11D forms to HMRC □ Agreed a dispensation for
the previous tax year
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Task 2.2 (a) Under what circumstances would you enter Statutory
Sick Pay (SSP) on an employee’s P14 return?
(b) Which ONE of the following describes the value of a
statutory adoption, maternity or paternity payment which is entered
on the P14?
□ The total of occupational and statutory payments made □ The
net amount after the appropriate recovery has been made from HMRC □
The gross amount of the payment before recovery of 92% or 104.5% □
Only the amount paid out in the last month of the tax year (c)
Describe the circumstance in which there would be a net refund of
income tax in the “In this
employment” box of the P14. You may refer back to the P14s on
pages 6, 7 and 8.
Task 2.3 (a) Explain why end of year NIC values for directors
must be checked before completing and submitting the P14s and P35
form.
(b) Which ONE of the following statements best describes the
situation an employer faces when
the P35 summary is completed just before the deadline for
submission and shows an amount of PAYE to be paid?
□ A cheque has to be produced immediately □ The deadline for
final payment has passed so a penalty will be due □ The employer
must call the Treasury and ask for advice □ The form is submitted
and payment is made on the next normal date (c) Does a paper P35
form have to be sent to HMRC when the returns have been filed
online?
□ Yes □ No
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Task 2.4 What actions must an employer have completed by the
following dates? (a) 6 July
□ Made the payment of class 1B NICs to HMRC □ Completed P9Ds for
all company directors □ Ensured that P9D and P11D forms have been
received by HMRC □ Issued copies of P60s to employees (b) 22
July
□ Supplied each employee with a P60 □ Returned amended P35 where
errors were found in the original □ Agreed amendment to a PAYE
settlement agreement □ Ensured that electronic payment of class 1A
NICs has been made for the previous tax year (c) 19 October
□ Paid over the class 1A NICs □ Agreed all amended P11D forms □
Paid the appropriate class 1B NICs to HMRC □ Completed the online
users feedback questionnaire
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Task 2.5 A new employee started on 6 October 2007 and by 5 April
2008 had been paid £8,000 and enjoyed benefits in kind totalling
£450. (a) Which form would you use to report the benefits in
kind?
□ P9D □ P11D □ P38A □ P38S (b) Explain your answer in (a)
above.
(c) By which one of the following dates must you submit the
electronic version of the form?
□ 19 May □ 22 June □ 6 July □ 19 July
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Task 2.6 Answer the following questions on the subject of staff
entertaining. (a) Company employees regularly attend off-site
training sessions. Explain the tax implications of providing
refreshments and lunches at such events.
(b) The Payroll Manager decides to treat her staff to lunch to
thank them for completing the end
of year returns within the deadlines. Assuming the company
reimburses the expense, which ONE of the following statements best
describes the normal tax treatment of the cost?
□ The cost is not returned, it’s a business event □ The Payroll
Manager pays the tax, she received the reimbursement □ Each
employee involved has a P11D with a proportion of the cost □ The
company adds the tax to its next normal PAYE payment (c) Describe
TWO actions which the company could take in respect of the cost of
the lunch.
1.
2.
Task 2.7 (a) Which ONE of the following is the standard benefit
in kind value of a van made available for
private use? £350 £500 £3,000 £3,500 (b) What adjustment can be
made if the van is over four years old at the beginning of the tax
year?
(c) Which ONE of the following statements best describes the
definition of ‘business use’ of a
company van?
□ Use other than actual private travel □ Business use plus the
occasional home to work travel □ Business use, all home to work and
occasional other private use □ Business use, all home to work
travel and doing the weekly shopping
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Task 2.8 (a) Which ONE of the following is the maximum, tax
free, sum per mile which an employer can pay to an employee who
uses their own bicycle for business journeys? Nil 5p 12p 20p (b)
How is the benefit in kind value calculated on a company owned
bicycle and related safety equipment which is made available to an
employee for both business and personal use?
(c) Describe TWO of the circumstances in which the employer
providing transport home would not be a taxable benefit in
kind.
1.
2.
Task 2.9 (a) What employer liability is signified by the “1A”
boxes found on the P11D?
□ Additional benefit tax □ Class 1B NICs □ Personal incidental
expenses □ Class 1A NICs (b) Which ONE of the following is the form
which is submitted with the P9D and P11D?
□ P9A □ P9D(b) □ P11A □ P11D(b) (c) Describe how the employer’s
additional liability is calculated once the P9D/P11D process is
completed.
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Task 2.10 HMRC guidance lists the dispensation as a key time
saving device in the year end process. (a) Describe what a
dispensation is.
(b) State TWO items which would NOT be included in a
dispensation.
1.
2.
(c) What effect does a dispensation have on expenses for a P9D
employee?
□ None, expenses are not reported on P9D □ Special agreement is
needed for dispensations for P9D employees □ None, all expenses are
reportable for P9D employees
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Note: You may use this page for your workings.
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Note: You may use this page for your workings.
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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) 06.08 140 Aldersgate
Street, London EC1A 4HY, UK t: 0845 863 0800 (UK) +44 (0)20 7397
3000 (non-UK) e: [email protected] w: www.aat.org.uk