The End Of Year Fear
Everyone's end of financial year is at different times but all businesses large and small share the same fear... VAT & HMRC compliance!
It's that time when all your preparation (or lack of) come's to fruit and you submit your returns to the taxman who will decide if you have or haven't done enough to satisfy him.
One of the biggest areas of fear comes from the controls and checks being carried out around an organisations travel and expense processes. Below I've detailed 6 points to think about:
- A clear and enforced policy
- An approval process that makes sense
- Correct documentation
- Checks and controls
- VAT compliance
- A secure payment process
A clear and enforced policy
Travel expenses aren't just about paying back your claimants whatever they've spent. You must have a clear and easy to understand policy in place that is accessible to all your claimants at all times. The policy must state what can and what can't be claimed and in what circumstances each item on the policy can and can't be claimed. Don't forget to detail your mileage reimbursement rules, it's critical your claimants know this. Lastly remember you need to tell your claimants what the £ limits are!
An approval process that makes sense
Is your approval process spanning the correct levels of your business? If not, you need to think about who needs to review or simply just have visibility of the expenditure going through expenses. After you've decided your approval sign off route you need to audit this on each expense claim.
How are your claimants evidencing what they've spent and why? You need to evidence a business reason for each and every single line of expense item being reimbursed. Receipts, invoices, PO's, travel bookings are just a few of the hundreds of examples you can show as proof; the important reminders are that these are shown for each and every line that is claimed. On your expense claim there must be at least 2 signatures; 1 x claimant 1 x approver MINIMUM.
Checks and controls
The HMRC don't have any set rules around this point but do state that checks must be carried out on each claim. Some of the minimum checks we'd recommend is VAT information showing on every VAT applicable receipt you intend to reclaim, each receipt is checked for compliance to your policy, date of claim is checked (not on weekend etc.) and that the mileage claims have been checked against a route planner and that the journey was a legitimate business journey.
Collect those VAT receipts! You must evidence that the VAT being reclaimed was due to a business expense and that it actually occurred.
Secure payment process
Lastly you must show that your payment process can't be tampered with. Think about how many human touch points you have, are people open to bribery/fraud or do you have too many people with access to the export/output?
Sure it's a lot to consider but once you've got on top of the points above you'll be in a much better place to confidently reclaim your business VAT but if you'd like a little help (or a large amount of help) we'd be happy to discuss your processes, weak points or just your day-to-day practices; visit Software Europe's managed expenses service Expedite.