Level 3 Certificate in Payroll Administration (QCF)

Payroll QualificationQuestion paperLevel 3 Certificate in Payroll Administration (QCF) Completing year-end procedures (CYE)Friday 18 June 2010 (morning)Time allowed - 3 hours plus 15 minutes’ reading timePlease complete the following information in BLOCK CAPITALS:Student member number Desk numberVenue code DateVenue nameImportant: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. You should use a pen rather than a pencil. You must not, during the exam, communicate with any other candidate or be in possession of unauthorised materials, such as pre-prepared notes, books, programmable calculators and dictionaries. Any of these actions will constitute malpractice and will result in disciplinary action. If you are in possession of unauthorised materials you must give them to the Supervisor before the start of the exam.Do NOT open this paper until instructed to do so by the Supervisor. Glossary of termsAVC Additional voluntary contributionCOMP Contracted out money purchase (pension scheme)COSR Contracted out salary related (pension scheme)ET Earnings threshold (for National Insurance contributions)GAYE Give as you earnHMRC HM Revenue & CustomsLEL Lower earnings limitNI National InsuranceNIC National Insurance contributionPAYE Pay as you earnSAP Statutory adoption paySMP Statutory maternity paySPP Statutory paternity paySSP Statutory sick payUAP Upper accrual pointUEL Upper earnings limit2 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 8, 26 and 27, but you should include all essential calculations in your answers.Both sections relate to the company described below.Introduction You are a Payroll Administrator for Fictitious Ltd. The company pension scheme is a COSR. The company qualifies for full recovery of any SAP, SMP and SPP it has paid out under the small employers’ relief scheme. The company does not satisfy the criteria for the Percentage Threshold Scheme for SSP.3 Note: This page is perforated. You may remove it for easy reference.Section 1You should spend about 135 minutes on this section.Against each task is the recommended time for that task, but please note that these times are guidelines only. DataAn extract of some of the final payroll records for the tax year 2009/10 is shown below.Khafayah John Vivash Bal Garcha Abdulsalam Final tax code K712 182L Month 1 647L Date of starting 9 March 2001 19 October 2009 25 May 2009 Date of leaving 5 February 2010 National insurance number SS938167A DD109368C LL409158B Gross pay for year, including SAP, SMP, 53,300.00 49,100.46 43,888.15 SPP, SSP and previous employment Pay from previous employment Nil 24,872.73 6,184.80 Pension scheme contributions 3,464.50 1,574.80 2,450.72 AVC contributions 1,800.00 1,110.00 549.50 Charitable giving for the year 1,800.00 450.00 225.00 Season ticket loan 3,000.00 Nil 1,750.00 Leisure club contribution 780.00 260.00 Nil Other voluntary deductions 160.00 724.80 893.83 Tax deducted for year, including tax from 13,861.60 3,915.20 7,871.20 previous employment Tax in previous employment Nil 4,218.60 1,348.00 Earnings at LEL 4,940 2,472 4,120 Earnings between LEL and ET 775 384 640 Earnings between ET and UAP 34,325 15,847 24,103 Earnings between UAP and UEL 3,835 1,595 2,552 Employee NIC in the year 3,730.25 1,698.32 2,599.15 Employer NIC in the year 4,792.18 2,134.99 3,302.38 Student loan payments 2,444.00 1,504.00 2,296.00 SSP paid in the year 1,139.76 47.49 253.28 SMP paid in the year Nil Nil 6,182.13 SAP paid in the year Nil Nil Nil SPP paid in the year 246.12 Nil Nil4 Task 1.1 (70 minutes)Use the information given on page 4 to prepare the employer’s annual return summary (formerly P14s) for the year end for each employee for the tax year 2009/10. Use the summary form below. Employer’s annual return summary (formerly P14s) for submission to HMRCKhafayah John Vivash Bal Garcha AbdulsalamNational insurance numberNIC categorySection 1a – Earnings at LELSection 1b – Earnings between LEL and ET Section 1c – Earnings between ET and UAP Section 1d – Earnings between UAP and UEL Section 1e – Total of employee’s and employer’s NICsSection 1f – Employee’s NICs for yearSection 1g – Total SSPSection 1h – Total SMPSection 1i – Total SPPSection 1j – Total SAPStudent loan deductionsPay in previous employmentPay in this employmentTotal pay for yearTax deducted in previous employmentTax deducted in this employmentTotal tax deducted for yearFinal tax codeDate of startingDate of leaving5 Task 1.2 (20 minutes)Using the information given on page 4, and on the completed summary form on page 5, complete the totals details in the following form for the tax year 2009/10. Use the form on page 7. 6 For all HMRC forms, please see Adobe (pdf) version of exam paper.7 Note: You may use this page for your workings.8 Note: This page is perforated. You may remove it for easy reference.DataJanet Huckvale enjoyed the following benefits in kind for 2009/10. You must now consider these for the 2009/10 tax year end P11D reporting process.1. For part of the tax year Janet had a company car which was also available for private use. The details are as follows: The car is a Toyota Yaris Tspirit, 1.4D -4D Multimode. It has a 1,364c.c. diesel engine. The list price, when new, first registered and supplied to Janet on 19 October 2009, was £14,755. The car has a CO2 rating of 110 g/km. Janet personally paid for two higher specification options before she received the car, as follows:. a special Vehicle Stability Control system costing £345, plus VAT of £60.37 . a protection pack costing £517 inclusive of VAT.  Between 19 October 2009 and 5 April 2010 Janet travelled a total of 15,829 miles. Business travel was recorded as 12,791 miles.  All of the fuel used in the car was obtained using a company fuel card.2. On 6 June 2009 Janet joined the company’s private medical insurance scheme. The company paid £1,250 for personal cover and a further £1,750 for family cover. Janet agreed to repay the family cover costs through deductions of £150 a month from her salary, starting in July 2009.3. Janet’s expenses claims came to £7,813.24 for the tax year. It was later discovered that she could not provide valid receipts for £217.83 of the expenses reimbursed to her. The company has a valid dispensation in place for the 2009/10 tax year.4. Janet used her home telephone for business purposes throughout the tax year and incurred bills totalling £692.86 for the year. She has itemised billing and identified £418.93 worth of calls which were business related. As this was more than 50% of her whole account, the company paid her £578.73 towards the cost.Task 1.3 (45 minutes)(a) Calculate the benefit in kind values of the car benefit and car fuel detailed above. Use the P11D Working Sheet 2 on pages 11 to 14 and the calendar on page 10. (b) Complete the P11D on pages 15 and 16 for (a) above and the other benefits. Note: You can use the calendar on page 10 for quick reference to the relevant dates.9 March 2009 April 2009 M T W T F S S M T W T F S S 1 1 2 3 4 5 2 3 4 5 6 7 8 6 7 8 9 10 11 12 9 10 11 12 13 14 15 13 14 15 16 17 18 19 16 17 18 19 20 21 22 20 21 22 23 24 25 26 23 24 25 26 27 28 29 27 28 29 30 30 31May 2009 June 2009 M T W T F S S M T W T F S S 1 2 3 1 2 3 4 5 6 7 4 5 6 7 8 9 10 8 9 10 11 12 13 14 11 12 13 14 15 16 17 15 16 17 18 19 20 21 18 19 20 21 22 23 24 22 23 24 25 26 27 28 25 26 27 28 29 30 31 29 30July 2009 August 2009 M T W T F S S M T W T F S S 1 2 3 4 5 1 2 6 7 8 9 10 11 12 3 4 5 6 7 8 9 13 14 15 16 17 18 19 10 11 12 13 14 15 16 20 21 22 23 24 25 26 17 18 19 20 21 22 23 27 28 29 30 31 24 25 26 27 28 29 30 31September 2009 October 2009 M T W T F S S M T W T F S S 1 2 3 4 5 6 1 2 3 4 7 8 9 10 11 12 13 5 6 7 8 9 10 11 14 15 16 17 18 19 20 12 13 14 15 16 17 18 21 22 23 24 25 26 27 19 20 21 22 23 24 25 28 29 30 26 27 28 29 30 31November 2009 December 2009 M T W T F S S M T W T F S S 1 1 2 3 4 5 6 2 3 4 5 6 7 8 7 8 9 10 11 12 13 9 10 11 12 13 14 15 14 15 16 17 18 19 20 16 17 18 19 20 21 22 21 22 23 24 25 26 27 23 24 25 26 27 28 29 28 29 30 31 30January 2010 February 2010 M T W T F S S M T W T F S S 1 2 3 1 2 3 4 5 6 7 4 5 6 7 8 9 10 8 9 10 11 12 13 14 11 12 13 14 15 16 17 15 16 17 18 19 20 21 18 19 20 21 22 23 24 22 23 24 25 26 27 28 25 26 27 28 29 30 31March 2010 April 2010 M T W T F S S M T W T F S S 1 2 3 4 5 6 7 1 2 3 4 8 9 10 11 12 13 14 5 6 7 8 9 10 11 15 16 17 18 19 20 21 12 13 14 15 16 17 18 22 23 24 25 26 27 28 19 20 21 22 23 24 25 29 30 31 26 27 28 29 3010 For all HMRC forms, please see Adobe (pdf) version of exam paper.11 For all HMRC forms, please see Adobe (pdf) version of exam paper.12 For all HMRC forms, please see Adobe (pdf) version of exam paper.13 For all HMRC forms, please see Adobe (pdf) version of exam paper.14 For all HMRC forms, please see Adobe (pdf) version of exam paper.15 For all HMRC forms, please see Adobe (pdf) version of exam paper.16 Section 2You should spend about 45 minutes on this section.Against each task is the recommended time for that task, but please note that these times are guidelines only. 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 (5 minutes)(a) Describe the method by which all employers must now submit their annual, end of year, P14 and P35 returns to HMRC.(b) By which ONE of the following dates must HMRC receive the P14 and P35 returns?22 April 5 May 19 May 22 May(c) State THREE checks you would carry out before submitting the returns. 1.2.3.17 Task 2.2 (5 minutes)(a) What does the P60 show and who is entitled to receive one?(b) By which ONE of the following dates must employees receive their P60?30 April 19 May 31 May 19 June(c) Information on statutory payments such as SAP, SMP and SPP is entered on the P14 return. In what way does this information differ from the same payment information entered on the P35?Task 2.3 (4 minutes)Sam, one of the company’s directors, was paid £7,575 in director’s fees for the year. He claimed £324.91 in travelling expenses, received his annual medical check up costing £500 and had his combined home telephone and broadband account, costing £29.95 a month, paid by the company. Directors are specifically excluded from the company’s dispensation agreement.(a) Explain the calculation of any benefits in kind applying to Sam. (b) Which ONE of the following forms would you use to report any benefits in kind in this case?P9DP9D(b)P11DOnline notification18 Task 2.3, continued(c) Explain your answer in (b) above.(d) By which ONE of the following dates must HMRC receive the report or form you selected in (b) above?31 May 6 July 19 July 19 OctoberTask 2.4 (4 minutes)(a) Explain the purpose of the dispensation agreement referred to in task 2.3 above. How does it affect the assessment of any benefit in kind for Sam?(b) Identify from the list below the ONE point at which Sam must receive his benefit in kind report.On the same day as the P60 is given to himOn the same day as the Class 1A NIC is paidBy the same day as the HMRC receives its copyOnly when he asks for his copy19 Task 2.5 (4 minutes)(a) Describe the current rules for determining whether the use of a company van is a benefit in kind or not.(b) Which ONE of the following values is the standard benefit in kind value of a company van if it is determined to be reportable?£1,500 £3,000 £3,500 £5,000(c) Explain what the reportable value is if the company pays for all the fuel used in a company van.20 Task 2.6 (5 minutes)The company holds a number of events each year for its employees and their guests. In the 2009/10 tax year it held a summer dance costing £18,753.82. This was attended by 250 guests, of which 183 were employees. The company used coaches to transport the guests at a cost of £1,732.50. A total of £3,051.15 was recovered in VAT. In December the company held its annual party, costing £26,438.75. Of this £3,198.40 was transportation costs and £23,240.35 for the party itself. In this case 300 guests attended, 218 of whom were employees. The company recovered £3,937.69 in VAT on this event.(a) Given the above information, what is the individual cost for the tax year of annual events as required by the current tax rules?Nil £81.95 £88.13 £170.08(b) Show here below how you arrived at your answer in (b).(c) Explain what action the company could take if there was a taxable benefit in kind resulting from such events and it did not want to report the values on P11Ds.21 Task 2.7 (4 minutes)Employees can use their own vehicles on company business and the employer can reimburse the cost of this use without the employee incurring a tax liability.(a) What is the maximum, tax free, amount per mile which an employer can pay to an employee for using their own car?12p 20p 40p 45p(b) Which ONE of the following values is the maximum, tax free, amount per mile which an employer can pay to an employee for using their own bicycle on company business?12p 18p 20p 25p(c) Describe the current tax rule if the employer provides a bicycle and safety equipment, free of charge, to an employee.22 Task 2.8 (5 minutes)There are a number of other travel and subsistence rules employers need to be aware of.(a) Describe TWO circumstances where the employer can pay the cost of a journey home without the employee incurring a taxable benefit in kind charge. 1.2.(b) What are the criteria for an employer to be able to reimburse an employee for personal costs during an overnight stay away from home, without incurring a tax charge?(c) What is the limit per night of personal costs which can be reimbursed in this way?(i) For an overnight stay in the UK?£2 £3 £4 £5(ii) For an overnight stay outside the UK?£5 £10 £15 £2023 Task 2.9 (5 minutes)One of the key methods of reducing the burden of year end reporting is the PAYE Settlement Agreement, or PSA.(a) Explain the purpose of a PSA.(b) Explain how income tax and NICs are calculated for a PSA.(c) By which ONE of the following dates must the income tax and Class 1B NICs be paid?19 July 6 August 19 October 6 November24 Task 2.10 (4 minutes)Another type of NICs is Class 1A.(a) On which ONE of the following forms will you find the information you need to determine the liability for Class 1A NICs?P9DP9D(b)P11DP11D(b)(b) Describe how you would use this information to determine the amount of Class 1A NICs which may be due.(c) By which ONE of the following dates must an electronic payment of Class 1A NICs liability be received by HMRC?22 May 22 June 22 July 22 August25 Note: You may use this page for your workings.26 Note: You may use this page for your workings.27 QCF qualification codesLevel 3 Certificate in Payroll Administration – 50042658 Unit number (CYE) – Y/101/8093© Association of Accounting Technicians (AAT) 06.10 140 Aldersgate Street, London EC1A 4HY, UK t: 0845 863 0800 (UK) +44 (0)20 7397 3000 (non-UK) e:[email protected] w: aat.org.uk2

Level 3 Certificate in Payroll Administration (QCF)

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