DIRECTORS AND EMPLOYEESAll those who receive a tax return, including employees, are included within the ambit of the self-assessment provisions.

Employees fully taxed under PAYE with no other income are not obliged to notify the Revenue of their chargeability or to self-assess, but other employees and directors will be governed by the usual rules.

To enable employees to comply with their reporting obligations, employers will be obliged to provide them with information relating to expenses and benefits in kind.

Thus, in the case of all directors and employees for whom a P11D has to be submitted to the Revenue, there will be an obligation to provide a copy to the individual by 6 July following the end of the year of assessment.

EXPENSESEmployers will have to provide particulars of all payments in respect of expenses on form P11D.

These will include expenses for entertaining, travelling and subsistence and any motor mileage allowances.

BENEFITS IN KINDThe sched E legislation contains extensive provisions regarding benefits in kind like car and fuel benefits, beneficial loans, living accommodation and share schemes.

Under self-assessment the employer will have to include on the P11D a figure for the taxable benefit.

However, it would be open to the employee to submit a substituted figure if, for example, he or she considered that the taxable figure should be less because business mileage exceeded 18,000 miles.

A novel feature of the legislation relates to the provision of third party payments and benefits with accompanying reporting requirements.RECORD KEEPINGThe existing obligations imposed on employers under the PAYE regulations and the Companies Acts are already comprehensive and further statutory reporting obligations are not contemplated.

So far as employees are concerned, they will fall under the general rules outlined previously (see [1996] Gazette, 15 May, 30).

Thus they will have to keep all appropriate records for 12 months after 31 January following the end of the year of assessment.

It will be insufficient for employees simply to enter on their tax returns 'per PAYE' or 'per P11D' and they will have to enter all amounts specifically, with the cash equivalent of all benefits and expenses payments received.

They will therefore have to retain P11D copies, mileage details and other motoring records, receipted bills, credit card stateme nts and all details of travel expenses.

Guidance notes will be issued in due course by the Revenue.ANTI-AVOIDANCE PROVISIONSThe transitional provisions for 1996/97 provide that tax is payable on 50% of the profits for the two years ending on the accounting date in 1996/97, which gives the taxpayer an incentive to maximise those profits.

Extensive anti-avoidance provisions have been introduced to prevent profits being artificially bunched into the two years.These apply where there have been changes in accounting policies or business practice, other than changes made for bona fide commercial reasons or where the change was not made to obtain a tax advantage.Where the provisions are invoked, the tax will be calculated as if there had been no manipulation of the profits and a further 25% penalty will be imposed.

So far as partnerships are concerned, a particular transaction which is caught is the 'privatisation' of interest by partners, ie the repayment of partnership borrowings and the substitution by a partner of a personal loan to provide capital for the firm.

Interest on a partnership borrowing would be relieved as a trading expense so, under the transitional averaging provisions, only 50% would be relieved.

But, if there were to be a personal borrowing, a full interest deduction could be obtained.Moreover, so far as partners are concerned, advantage could be taken of the transitional overlap provisions by arranging for a partner to retire in 1996/97 and part of the impact of the transitional overlap relief provisions being avoided by a manipulation of the profit-sharing ratios.

The anti-avoidance provisions counter such devices.