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HMRC internal manual

Employment Income Manual

Benefits: exemption for workplace nurseries: commercially marketed nursery schemes: dealing with disputes

If the salary sacrifice is effective, you may be faced by a refusal by the employer to report the benefit on forms P11D (because they believe the benefits to be exempt under Section 318) or a failure by the employees to include the benefit in their SA returns (for the same reason). In those cases you should consider:

  • taking penalty action against the employer for the submission of incorrect forms P11D (especially if you have previously advised them that the exemption does not apply) and/or
  • opening a Section 9A enquiry into the employee’s SA return. If the employee will not accept liability this will result in an HMRC amendment and an appeal to the First-tier Tribunal.

From 6 April 2005 you may issue a Section 8 notice to the employer in respect of unpaid Class 1A NICs. The employer has the right to appeal and the appeal can be heard by the First-tier Tribunal.