UK organisations fail to claim £124m in VAT on mileage claims

Have you ever wondered how other companies deal with their employees expenses? Well now you can find out thanks to an annual report the Global Expenses Employee Expenses Benchmark Report 2011. If you do not have time to read the report don't worry I have summarised the major details below.

During 2010 there was unprecedented levels of high profile expense fraud cases - remember the MP's? More alarmingly a study carried out by YouGov in 2010 highlighted that 22% of people judge it acceptable to overstate expenses with 25% claiming expenses admitted to inflating claims and 23% regularly adding £11 to £50 per month.

Global Expenses report covered £10billion paid in expenses to employees of which 10% was not compliant with the company policy. That's right £1billion was paid to employees for expenses that did not even meet the companies internal policy! It is believed that £325million of this was in exaggerated claims.

It is no wonder when 84% said their employer never queried expenses and some 50% said there was no written policy in place. Would you pay your staff salaries without checking them first?

In 2011 HMRC have given an extra £900million in funds to improve compliance in this area. The risk of employees falsifying expense claims is not the only risk - what about expenses claims non-compliant with HMRC regulations?

In 2010 UK organisations failed to recover £124million in VAT from mileage claims. Are you recovering the appropriate VAT on your mileage claims?

How to reduce risk/good practice

Implement a written policy - clear, followed, distributed and checked
Monitor - inform employees where issues arise otherwise it will continue to happen
Document - reasons for deviation and whether they are acceptable and inform employees
Education - keep employees up to date and compliant especially if changes are made to the policy
Automation - there are many solutions now available
Case Study

A report produced for a customer highlighted staff members who regularly stayed in luxury hotels whilst others stayed in budget chains. This lead to a company policy whereby all staff members stayed in certain chains as discount was achieved from the chain in return for the loyalty shown by the company. The net result was £000's saved in hotel and other expenses that were reported on. Hotel claims usually exceed spending limits indicating the policy may be unrealistic.

If you have any concerns over your existing policy or you do not have one then don't delay speak to us today and we will help you start saving money. Better management and control of expenses directly protects your bottom line.

Smart Accountancy Systems