Uncorrected oral evidence: Draft Finance Bill 2026-27
Oral evidence, 29 October 2026.
The Chair
Welcome to this meeting of the Finance Bill Sub-Committee of the Economic Affairs Committee. To the extent that the House of Lords is allowed to have views on taxation, we are looking at the detail of the Finance Bill as it affects the workings of the tax system. The topic we are looking at today is the mandatory payrolling of benefits in kind; in other words, the computerisation of the P11D, which many people will be familiar with. It may sound simple, but in fact—as I have read from my briefs—it is more complicated than it sounds. I ask our expert witnesses to briefly introduce themselves now.
Katie Close
I am the director of tax at ICAS—the Institute of Chartered Accountants of Scotland—which regulates and educates chartered accountants. I am in charge of our tax policy team.
Adelle Greenwood
I am the employment, tax and national insurance technical manager for the ICAEW, the Institute of Chartered Accountants in England and Wales.
Sarah Hewson
In my day job I lead the employment tax team at Crowe, but today I am representing the Chartered Institute of Taxation in my role as chair of the employment tax technical committee.
Chris Campbell
I am technical officer with the Association of Taxation Technicians, or the ATT for short. Part of my remit involves leading our work on employment taxes.
The Chair
We are looking at the mandatory payrolling of benefits in kind. The ability to do this online has been in existence since 2016; it is a matter of interest as to why it has not taken off, and why most people continue to submit paper P11Ds. I am interested in your explanation as to why, given that in many other walks of life people are used to online services now. What are your views about this? Is it the Government’s fault that they have not tried to sell this to the public in a simple way?
Katie Close
There are probably a lot of reasons that, joined together, mean it has not been popular. Businesses have established processes: they are used to working with the P11D process and it works for them. A business would probably not see this mandation as a simplification; it is a transformation project, and transformation projects use up a lot of resource, investment and time, and require a lot of planning. Businesses have their own internal calendars so they will have worked out what time is needed from their payroll team, their HR team and other business units that feed into this process. This will probably not get a lot of buy-in if it is going to take up so much time internally and they already have a process that works for them. There would also be concerns about the limitations of the software: does it do what it needs to do? Other big concerns would include double taxation and reliance on third-party data. Would they be able to get the information in the required format and in the time needed to do it in real time? There is also a lack of guidance; some benefits are very complicated. The legislation does not necessarily support it being in real time, so there is a lack of guidance around how they would do that.
The Chair
Do others wish to come in on this? It is an opening statement, so you should say what you want to say.
Sarah Hewson
A lot of organisations know the P11D process and are comfortable with it. Any change or moving to an unknown is difficult, and it is difficult to get people on board. In HMRC’s defence, there are some benefits to employers, but they are limited. The main beneficiary of mandatory payrolling is HMRC, then the employees; the employers are at the bottom, so it is difficult to sell the benefits to them. Anything that interrupts the day-to-day activities of operating a business is a challenge. Moving everything to end-of-year, having defined processes, and having certainty at end-of-year is often simpler for many organisations, so there is a reluctance to move across. Under the voluntary regime at the moment, you still have to do the annual process of the P11D(b) for employer national insurance purposes. Many organisations see no benefit in having a real-time in-year process and an end-of-year process, so the benefits are limited.
Adelle Greenwood
I agree with what Sarah and Katie have said. For a lot of employers, it would necessitate a complete process change and that requires investment; it costs employers to change it. Getting data earlier from benefit providers is not always possible. That might require contractual changes, which again might come at a cost. Employers have been reluctant to move their timeframes earlier in the year when it comes at a cost and there is no real incentive.
Chris Campbell
I agree with everything that has been said. The system is looking at non-cash benefits, which are traditionally more suited to the form P11D route. Employers are accustomed to that: it has been around for a long time. There is also the fact that, because of HMRC’s real-time information obligation to do this on or before the date of payment, the information has to be more readily available. Within organisations, HR and payroll departments may be involved, but the department where benefits in kind are cropping up is finance, perhaps liaising with external benefit providers. It is a challenge when they have not had to do it before, and when there is no incentive. As Sarah said, in terms of calculating the benefit more accurately and in real time, the incentive is largely for HMRC and the employees themselves. There are potentially some benefits for employers, but those should not be overstated: for instance, there may be a slight reduction in queries from employees and fewer PAYE coding notices coming through from HMRC, but there are not many real tangible benefits when it does not have to be done that way.
Lord Leigh of Hurley
Do you think this is a reflection of a polarisation of views? HMRC thinks that businesses exist to pay tax, and businesses think that tax is just a pain you have to go through in order to carry on. Do you think that HMRC has listened to businesses enough if it does not understand why businesses do not want to do this? From your submissions, 16,000 out of 280,000 have done it to date. Is the problem that HMRC does not understand what businesses are all about, and is that why there has been such a low take-up?
Chris Campbell
HMRC has perhaps underestimated the cost in terms of administration, especially in year one and the early years of moving to mandatory payrolling. There will be additional costs when you have benefits in kind. Traditionally, the information comes through once a year for the P11D but, if you have a weekly payroll run, you may have to access that information 52 times a year. There may be savings and efficiencies in the long term, once businesses get used to it, but the cost and burden of administration has probably been underestimated by HMRC.
Sarah Hewson
I would agree. At the outset, the belief was that for most organisations it would be a very simple move and not too demanding. To be fair to HMRC, it has recognised the complexities in the two years since this has been announced, but I do not think those complexities are necessarily getting addressed as quickly or as urgently as we would have hoped in order to be ready in time for 2027. That is partly what has led to the phased approach. HMRC is listening, but there is still a gap in its understanding of why businesses are facing challenges and what those challenges are.
Adelle Greenwood
I would add that maybe there is a lack of understanding of how businesses work and how data flows within businesses. Things do not always happen in advance: reporting is often done after the event—data is requested or data flow happens afterwards. That requires it either to be known about in advance or at least to be known about in time for the payroll run: that is a big change for some business operations.
Katie Close
I agree with everything that has been said. HMRC does not always engage with the amount of time it can take for a business to make changes to their processes. Businesses need certainty well in advance so that they can design and test their processes to make sure that they work. Ultimately the risk is that, if the business gets it wrong and things do not work as they are supposed to, employees may suffer.
Baroness Wheatcroft
Given that HMRC seems to have accepted that some benefits simply cannot be subjected to this treatment, does it seem that it has not taken into account that this will force businesses to use both methods and that it will be more work rather than less, so they might as well stick with one as long as they can? Or do you think that the long-term—and probably desired—effect will be to stop employers doing benefits in kind? Does anyone have a view on that?
Sarah Hewson
I do not think the long-term idea is to prevent the provision of benefits in kind. In fact, you would hope that the Government would encourage things such as healthcare: employers play an important role in supporting such things. The Revenue has always been nervous about the weight of a full remuneration package, including how much of it is cash versus other things, and how much information it has in order to understand what those things are and that they are being reported and treated correctly. To your first point, the Revenue acknowledges that there will be a dual process and that complexity and cost will be involved; we are very cognisant of that. At the moment it is the only way we can achieve bringing something in within a reasonable timeframe. It is about getting organisations to understand those parallel processes and HMRC to understand what complexity and cost are added for organisations.
Baroness Wheatcroft
Does anybody have a different view, or a view on whether HMRC understands the difficulties in valuing some benefits as they change over the course of the year?
Chris Campbell
I agree that there are challenges when it comes to valuing some benefits. It should not be forgotten that two benefits are being excluded from phase 1 and phase 2 of the mandatory payrolling rollout: legislative change might be required to bring about their calculation in real time. However, I see no intention on the part of HMRC to prevent benefits in kind; it could even be disadvantageous for the Exchequer because there is a large take of tax and national insurance from those benefits.
Lord Newby
Some benefits are not coming into the system immediately, so we are going to have two systems. Can you envisage a time when there will simply be one system? At one level, that seems to be the whole point.
Adelle Greenwood
It will be very difficult unless there is a change to how annual reported benefits are valued. For example, the benefits code for loans and accommodation is essentially written for those to be reported annually. Yes, we can use estimates, but they will always require updating during the tax year and a reconciliation at the end of the year. There is perhaps an opportunity here to look at how those benefits are valued and whether it is possible to fit them into a real-time reporting scheme.
Sarah Hewson
There is an underlying principle that has not been thought about with benefits as a whole; everything—including the whole benefits code—is written to be an annual process. There has not been a first step to say, “Should we look at how benefits are calculated before we go to amending reporting?” If that had happened first, then maybe payrolling would be an easier step because there would not be so many complications and potential fluctuations.
Katie Close
We agree strongly with this. Legislative change is required to make the payrolling of benefits work effectively.
Lord Carrington of Fulham
It sounds like a fair old mess, from what you are saying and from everything that has come out. If HMRC is going to run two systems in parallel at the same time, it is hard to see how it will achieve any of the timeframes it is talking about, particularly if not many companies have implemented the changes yet, even on the simple P11D reporting requirements, let alone the more complicated ones. Do you see HMRC being able to achieve any of its timeframes on this?
Chris Campbell
From our perspective—our written evidence is in line with this—the need for employer guidance is paramount. We were supportive when the phased approach was announced back in May this year. We felt that it gave HMRC time to consult, get the guidance right, and get those technical specifications right, particularly for phase 2. The reality has been that HMRC has not moved at enough pace. If more guidance had been published earlier in the year, that would have allowed employers to realise how the changes would affect them. The answer to your question will depend on how quickly HMRC’s guidance can come out, and where there are issues on which employers need further clarity, how quickly HMRC can respond and clarify any guidance. We are concerned about phase 2: 2028 might seem a long way away, but HMRC should not rest on its laurels. It is important to move forward and engage with stakeholders at pace.
Lord Carrington of Fulham
It is not a long way away, if you have to make all the changes to the payroll software to make it happen and iron out all the problems of what items you can put into the new reporting system and what you have to keep on the old P11D. Really, 18 months is not a huge amount of time to get all that done, particularly for large companies and SMEs that are above the threshold. I would have thought that such companies would find it a real problem. Is that your experience?
Adelle Greenwood
Our perception is that a lot of employers have an overreliance on software to pick this up. They are not preparing for it because they think it is something that software or their payroll bureau or an external provider will be able to manage for them. There is a lack of awareness of the additional data flow and additional processes that they will need to change internally in order to meet their obligations.
Sarah Hewson
You mentioned 18 months, but we are five months away and we still do not have the software specification and details. As Adelle was saying, employers are going to rely heavily on payroll software providers; without knowing that information, it will be very difficult for them. Realistically, some things can happen by April 2027. Those who are already payrolling will probably be prepared, as will some very large organisations that have already been thinking about this and have the resources. SMEs are in a different arena. As Adelle said, some are probably not overly aware of the change at all, but even those that are aware do not understand what the change means and what they need to do. I feel that the Revenue has committed to 2027 and will find it difficult to pedal back. What will happen in 2027? If this is going to go live, we need a bit more flexibility. It will go wrong, so there need to be avenues for advice; where do you go to ask questions? There is a big gap: the Revenue has a communication plan that has not started, even though we are five months away. It is probably a bit late in the day to be sending letters to employers, and they are probably going to get lost. The gap is employees, and how aware employees are that this is going to happen. Has the Revenue properly tried to engage with employees? I do not think it has; getting them to engage with employers and raise questions is a route. If this is going to go ahead, a lot of corrections will be needed in the first year and things are going to go awry. Employees are going to be confused because it is likely that their pay will fluctuate quite heavily. There are other complications too: how do you educate employees to understand what has happened and the impact of this change from April?
Lord Carrington of Fulham
I do not understand why HMRC sees a benefit in this. I understand that there is a theoretical cash flow benefit to the Treasury in that it will get some tax in on a monthly basis rather than at year end, but that will be minimal. In the great scheme of government borrowing, it is not going to change the needle on the dial at all. It must also be costing HMRC quite a lot of money to carry out the administrative changes to cope with going to a computerised system, and in particular having to maintain a dual system for goodness knows how many years. In your experience, does HMRC calculate the cost benefit of changes such as this?
Sarah Hewson
It does, and generally those are published. I am not sure how accurate they are.
Lord Carrington of Fulham
That is really the question I am raising. I know it comes up with fantasy figures.
Sarah Hewson
I do not know its methodology. From our experience of other changes—such as off-payroll worker changes—I would anticipate that the initial investment from HMRC is huge. Having to build advice, go out to businesses, and engage with them has a massive cost. I would assume that the Revenue is looking at the long-term benefit and the bigger picture. It is not just about money; it is about getting data in real time because it wants that data and information. It has also been open about the amount of admin time spent in processing. I have seen fluctuating figures, but it processes between 3.5 million to 4.5 million P11Ds a year. That is a lot of work in a very finite period, which all has to be processed; it needs to work out how it will collect the tax and adjust tax codes, so the main benefit it is focusing on for itself is simplification. I question whether we will see that full benefit: there is still going to be the end-of-year process, and that might be more complicated than envisaged. It will probably still require less actual admin time from the Revenue. In 10 years’ time, if this is bedded in, there probably will be quite a few benefits to the Revenue.
Chris Campbell
That has to be contrasted with the burden of cost on the part of employers. I agree with everything that Sarah has said, and would add that from HMRC’s point of view, there must be differences in the move to mandatory payroll. It is different from the voluntary regime that has been in place since 2016. When you think of other tax initiatives such as Making Tax Digital for income tax, businesses register voluntarily using the same platform as when they are eventually brought in mandatorily. Compared with payroll and benefits and the voluntary scheme that has been in place since 2016, the data requirements on employers are potentially far more onerous. How will that data come through to HMRC? One can only assume that it would move to an additional system to allow it to incorporate all the different technical specifications and schema that it requires to get data in from employers.
Lord Newby
Is it possible to estimate what proportion of businesses will need to run the two schemes? How prevalent are the benefits that are not coming in within the short term or even medium term? If only 10% need to run both schemes, that is a very different proposition from if it were a majority. Do you have any sense of that?
Adelle Greenwood
It is going to be quite a large majority: you are not only talking about benefits that were not originally mandated, but other exclusions also. For example, there is an exclusion for globally mobile employees because it is very difficult to get that data. You are probably talking about quite a lot of employers who either have phase 2 benefits—the non-mandated ones—or who have employees in this exclusion group; there may be other exclusion groups further down the line. I think most employers will be affected, but I am not sure I can suggest the proportion.
Sarah Hewson
When it comes to loans, SMEs have a lot of directors’ loan accounts; they are far more prevalent than you might think. They are carved out, but it will be complicated to bring them into a voluntary, real-time regime because the amounts fluctuate—that is their purpose. The Revenue is probably the best place to go for that data; it should have it via the P11D reporting, and the current payroll reporting.
Chris Campbell
It would be difficult to speculate as to the number of employers affected. In terms of the number of employees, HMRC has clearly stated that phase 1 covers the vast majority of benefits, but you could have only one or two employees—perhaps the directors—and the employer may have phase 2 benefits further down the line. As Sarah says, directors’ loan accounts are very common with the SME, owner-managed, business-type market.
Baroness Wheatcroft
Sarah, you suggested that HMRC is interested in this information for other reasons than tax collection; that makes me slightly nervous. What information do you think it might be looking for, and why?
Sarah Hewson
We have asked HMRC that question. It has suggested copying and pasting the P11D form into the payroll software, which has lots and lots of fields; it seems reluctant to consider simplification. Why does it need data, and what for? A couple of years ago, the Revenue held a consultation: it wanted more data via PAYE. CIOT challenged it—as did others—to say why it needed this data; it is not linked to tax, and it puts a burden on employers. It seems that HMRC just likes to have data, and it does not always make clear why it needs that data or why it is helpful, so we cannot answer that question. What we know is that it is reluctant to slim down that data; it wants as much as possible.
Adelle Greenwood
When the original RTI data fields were published, there were 126 fields, which have now been reduced to 32; 14 were already in the RTI because they are associated with company cars. Those 126 data fields asked for a lot of information about various benefits, start dates and cost. Cost is probably necessary, but information such as dates and how far they go back is not needed in order to calculate the taxable value, so there is a question about why it was ever thought to be needed.
Chris Campbell
I agree with Adelle about the number of fields. Our concern—and we have had discussions with HMRC on this—is that, if any of those fields are not completed, it could result in the real-time information submission being rejected for the employer’s whole payroll. That does not only affect the employees where there is a particular benefit involved, it affects everyone. Many of the other employees could be on universal credit, but that information is not translated through to the DWP. That was one reason why we welcomed that longer period and phasing approach. We need to make sure that HMRC is using that time wisely so that any issues that need to be ironed out with the data can be done in time for phase 2 coming through. In recent times, HMRC has often asked for information that is nice to have, as opposed to what it requires for the purposes of the collection and administration of tax.
Katie Close
I agree with everything that has been said. We see the same thing with HMRC creating proposals for updates, which ask for more information than we believe it requires. That raises the same question as has been raised here: what does it need all that information for? It seems it wants to have it in case of some future use. From our point of view, that is not acceptable. If it is going to introduce digital systems for taxpayers, they have to be proportionate and easy to use. One that asks for onerous amounts of data is not proportionate or easy to use.
Baroness Bi
How realistic do you think HMRC’s estimates are around the cost and the amount of effort that this system will impose on employers?
Chris Campbell
I can say with some comfort that HMRC’s estimate of the cost for employers will be understated. I am thinking about the need to engage with benefit providers for information, whether that is on private medical insurance or a car fleet for the benefits in phase 1, or other benefits further down the line. When you engage with external stakeholders on an annual basis, and that then needs to be brought forward to a monthly or a weekly basis, that cannot be at no extra cost; it is a mathematical impossibility. In fairness to HMRC, I cannot offer alternative costings; that is not something we can provide, but there will be a cost to compliance, especially in the early years when benefit providers are not accustomed to providing information in that timely manner. Whether in the longer run they will increase their charges or have an admin fee for providing weekly or monthly reports will depend on a case-by-case basis, but HMRC certainly needs to revise its cost calculations.
Sarah Hewson
I agree. Taking a step back to look at how the payroll software works—without thinking about data collection and other things—there will be additional steps, and those generally require additional costs. The timelines do not marry up with all the different things that employers are required to do. There will be this end-of-year correction process. What do I mean by timelines? At the moment, a P60 has to be issued to employees by 31 May. If you are payrolling, you have an employee statement on 1 June. We are now going to have this end-of-year correction process on 22 July. If you process those corrections, your statement to employees is wrong; your P60 is wrong. At the moment, a number of payroll software providers cannot provide an updated P60—if they do, they will charge you for it. The corrections are going to be done by updated submissions through the payroll; we think that will be through the end-of-year process, but it has not been clarified yet. That is a submission per employee. Even after that, if you see an error, it is a per-employee submission. If you have a complex benefit and you need to amend it for 1,000 employees, you are doing 1,000 submissions. Payroll providers will charge you for every single submission. You will have real-time costs, and potentially—if something goes wrong—professional adviser fees as well. If the Revenue picks something up, you might end up with a compliance review. Whether or not you have adviser fees, there are admin and time costs in dealing with that review. We think the costs have been underestimated, but obviously, we are not best placed to calculate those.
Adelle Greenwood
I agree. I would add that if you are using estimates, because you cannot value your benefit at the beginning of the tax year, it is likely that there will be a cost in calculating and updating those estimates when the value becomes known during the tax year.
Katie Close
I would add that HMRC has maybe not estimated how this will affect the internal workings of a business. It believes that the existing staff within a business will be able to take over this new process quite easily and see it as a simplification, but there is a big difference between having one member of a payroll or HR team working on something for one month in the year, versus working on it continuously throughout the year. They may not have the time to dedicate to that; businesses may have to employ more staff. Departments within a large business might need to communicate with other teams that have the information that is needed, and they might not have the time. This will impact how businesses are run internally.
Lord Leigh of Hurley
Just to go back to the first point—and Katie’s point—HMRC seems oblivious to the fact that in making life easier for itself, it makes it troublesome for business. Is there any precedent for an exemption being made for micro or SME businesses? If so, is there any window within HMRC that might be sympathetic to that plea?
Chris Campbell
That is an interesting suggestion. At a practical level, I can see the merits for small and medium-sized businesses. My immediate thought is: how would the practical day-to-day operation of such a move work if a business goes above or below the threshold? There are just as many challenges for larger employers as smaller employers in respect to the benefits in phase 2 and beyond. As we stated in our written evidence, many of these issues depend on the types of benefits that are being provided as much as the size of the employer. Large firms—say, retail businesses—may employ tens of thousands of employees, but do not necessarily provide a large number of complex benefits. A director in a small business might have large, complex benefits, many of which are in phase 2. It is very difficult to tell, as the size of a business does not necessarily correspond with the complexity and the practical challenge that the move to mandatory payrolling would bring.
Sarah Hewson
You raise an interesting point: the closest example I can think of is when the Revenue introduced real-time information reporting as a phased approach by size of organisation. The largest came in first, over—I think—an 18-month period. The very smallest organisations are still carved out of real-time information for certain reasons, but most are in. It was a phased approach to give smaller organisations time to adapt to that change.
Adelle Greenwood
It is a similar situation for auto-enrolment. I would agree that larger employers often have more complex benefit packages; they are more likely to have multiple benefit providers and to need to get data from various sources, which might not always be easy. They might be more able to fund it, but it still might not be a simplification.
The Chair
I am interested in exploring HMRC’s motivations in wanting to increase the pace of this modernisation. First, it might be technological: in the modern world it is ridiculous to be dealing with bits of paper. Secondly, it may have to meet a staff reduction target as part of a government efficiency measure, and the only way it can do that is by computerisation and trying to reduce manual tasks as much as possible. Thirdly, it is possible that HMRC sees benefits in kind as a major source of tax avoidance. Could this be one of its routes into tackling the tax gap, which is often referred to in terms of many billions of pounds?
Chris Campbell
There are a few potential motivations for HMRC, for instance the acceleration of the collection of tax on benefits in kind. For example, if you had an employee who started receiving a benefit in April this year, it would not be reported on a P11D until the end of the tax year. It then takes time to be included in the employee’s PAYE coding notice. In that extreme example, you could have a lag of well over a year between the benefit first being provided and any tax being paid. The other advantage to HMRC is in moving towards being a digital first organisation. There are a lot of noises and evidence that HMRC is moving in that direction because it wants to do things more efficiently and digitally. Lastly, there have been challenges when it comes to amendments to P11Ds. Although the P11D itself can be submitted electronically to HMRC, any amendments under the current system have to be manually processed by a member of HMRC staff. It may well consider it necessary to pass that burden on to the employer to correct.
The Chair
We have taken separate evidence on the question of corrections. Do you think that this measure is related to the desire to have a tighter grip on corrections?
Adelle Greenwood
There is an argument that it could be. The initial data requirement was perhaps to ensure that benefits were being reported correctly by requiring all the data to work out where the valuations had come from. When this measure was first announced, the idea was that P11Ds would no longer be required; it would have been a big cost saving to HMRC if it did not have to process them any more. Obviously, that is no longer going to be the case and will not be for several years, so perhaps that has changed since this measure was initially announced.
Sarah Hewson
There are broadly two categories or routes of correction under payrolling: the first is making corrections through the payroll software itself and the second is through some form of liaison with the Revenue, whether by making a voluntary disclosure when you make an error, or when some form of review from the Revenue triggers the discovery of an error and the need to correct it. In the second piece, how time periods are calculated is different for payroll and P11D items, which adds complexity. There may be a benefit to the Revenue in having one streamlined system if something needs to be corrected; there might still be two categories, but on the second category there is one clearer route. That is perhaps linked with the consultation to align national insurance recovery with tax recovery timelines; the inquiry or disclosure route will be simplified.
Lord Newby
I would like to move on to the requirement to correct more generally. Do you think its declared objective of improving taxpayer compliance will be successful?
Chris Campbell
It could have that potential outcome; however, there are quite a few areas where there is a lack of clarity in terms of what the rules mean, and that is supported by our written evidence. We are also mindful of the fact that HMRC has a system of one-to-many letters. It is not clear to us how that fits in with the move to impose a duty on taxpayers to notify HMRC when they become aware of an issue, or the correction notice that HMRC could send to taxpayers. Our other observation is that the guidance and the proposed legislation do not make clear at what point a taxpayer should become aware that an error has arisen. It is ambiguous: is it immediately, when it first comes to light, or are they afforded the opportunity to establish the facts and form a reasoned view before they take action to notify HMRC? Things like that have not been made clear. There is potential but, in the meantime, we have concerns.
Sarah Hewson
Similarly, one of the institute’s recommendations was about tailoring communication and guidance for taxpayers; that means having clear and targeted guidance and communications in the employer context, including clear correction processes. At the moment, the guidance around correcting payroll errors is confused; it needs to be much clearer and much easier to follow. If I have identified an error, it should show how I correct it. I do not think it is helpful enough. Sometimes there is an assumption that the employer is incorrect, and that is not always the case. It is not clear to what extent this will change behaviour, but to even have a hope of that it needs to be communicated well and—in the employer context—tailored to what it means to employers.
Adelle Greenwood
Many employers are represented by an agent, and they will be encouraged to correct things that they or their agent become aware of. If they are not represented, they are probably not going to be aware of this measure anyway, so it might have only a limited impact. Otherwise, I agree with Sarah and Chris that guidance on how to correct things, and when to do that, would also be helpful.
Sarah Hewson
It goes back to better guidance on when something is a benefit. That is not always clear. Many organisations take the view that something is not a benefit to an employee in the context of the benefits code: the Revenue disagrees but it does not necessarily publish that, or it has changed its view and not made that clear to employers. There has to be some onus on the Revenue to make its position clear, otherwise organisations do not know that there is something that might need correcting.
Lord Carrington of Fulham
Could you give us an example of that?
Sarah Hewson
Immigration costs are a key one at the moment. You might have seen an exception for certain items in the Budget announcement yesterday. That may be a surprise to a number of organisations that do not appreciate that the Revenue considers them to be taxable at all, or that the Revenue’s view has changed, and the Revenue’s view on all the different elements of immigration costs.
Lord Carrington of Fulham
Is that the cost of resettlement?
Sarah Hewson
It is all the costs. If you want to bring a worker into the UK, in a lot of cases all the visa applications, the immigration skills charge, certificate of sponsorship, and sponsorship licence—plus the associated professional fees—will be taxable; that is the Revenue’s view. We have had some progress with the exemption that has been announced, but it has limited scope. That will be a surprise to many organisations who will not understand why an exemption is needed: they do not appreciate that these costs are taxable or that the Revenue considers them to be taxable.
The Chair
If there are no more questions, we can draw this part of our meeting to a close. Thank you very much for coming along and talking to us about a very complicated subject that not many of us understand. We are very grateful for your attendance.