Peter,
Many thanks for clarifying and send through the links. I was just concerned about the over-retention of receipts. I could see the need to verify expenses with receipts, no payment without a receipt, I was just thinking from a RM/DPA view that too many documents being held creates a headache.
This has helped me understand the issue .
Thanks
Lawrence
-----Original Message-----
From: Peter Emmerson [mailto:[log in to unmask]]
Sent: 10 April 2014 13:48
To: Lawrence Serewicz; [log in to unmask]
Subject: RE: Travel and Expenses Claims
Employers handle expenses claims under a dispensation from HMRC.
http://www.hmrc.gov.uk/payerti/exb/schemes/dispensation.htm#2 This is designed to obviate the need for individuals to submit proof that such expenses were incurred, and therefore refunded, in the normal course of business, as part of their individual tax returns. This is what unincorporated sole traders may be required to do. Clearly HMRC are happy not to have to do this for everyone. The recordkeeping rules are clearly stated at http://www.hmrc.gov.uk/payerti/exb/recordkeeping.htm. Retention in this case is in line with taxes management regulations and employers (not the individual employees)would be required to retain the relevant receipts and documentation in case the revenue chooses to challenge the way the dispensation operates. The specified retention period is 'three complete tax years after the end of the tax year to which they relate.' There is, of course, no reason why the detailed documentation should be kept with the submitted and authorised claim or payment record and scanning them would seem to be a bridge too far for such a short retention period.
As far as VAT is concerned, the rules are set out in http://www.hmrc.gov.uk/vat/managing/reclaiming/travel-subs.htm . In essence the employer can reclaim the VAT portion of any travel or subsistence expenditure incurred on behalf of the employer. This is different to the refund of expenses covered by the dispensation because it's for the employers benefit. Records of relevant transactions must be kept. This would generally exclude, for example, mileage claims and most forms of public transport costs but would include hotel accommodation and meals. From The HMRC website: 'For how long must VAT records be kept?
Generally you must keep all your business records that are relevant for VAT for at least six years. If this causes you serious problems in terms of storage or costs, then HMRC may allow you to keep some records for a shorter period.' So if you're concerned about the storage costs, speak to HMRC.
I know from my former corporate experience that HMRC do challenge expenses payments if they think that the system is being gamed in any way.
Also, if it's any consolation, I ran a VAT registered business for 11 years and reclaimed the VAT portion of travel and subsistence expenditure incurred throughout that time. We were never once asked to produce the receipts and even our accountants were happy to work from the schedules provided.
Peter Emmerson
Poplar House
5 School Street
Witton-le-Wear
Co Durham
DL14 0AS
Tel: +44 (0)1388 488865
Mobile: +44 (0)7516744795
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