creating an expenses policy (procedures and advice)€¦ · • analyse expenses spending data and...
TRANSCRIPT
Creating an expenses policy
(procedures and advice) Steve Ashworth
Smith & Williamson LLP
CIPP - Creating an expense policy
Procedures and advice
Steve Ashworth
Associate Director, Bristol
0117 376 2298
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This seminar is of a general nature and is not a
substitute for professional advice. No responsibility
can be accepted for the consequences of any action
taken or refrained from as a result of what is said.
Disclaimer
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Would you agree with this?
“Employee expenses is a significant cost to most
businesses and in the majority of cases it is badly
managed and poorly controlled.*”
*HR Magazine Sept. 2010
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You may or not agree, but……..
“The main problem with expenses policies is not the
value of the individual claims, but the clarity of the
policy and training of those whose job it is to
implement it.*”
* HR Magazine Sept 2010
Creating an expense policy
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• The session will look at creating an expense policy,
which has the procedures and checks in place to
ensure it is robust and would stand up to scrutiny
if HMRC were to undertake a PAYE compliance
review.
• Focussing on:
• Well defined Guidelines
• Distinct Timeframes
• Easy to follow expense reporting procedure
• Straightforward employee communication
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• Employee expenses = significant cost
• Risks = management and control
• Errors and mistakes = more focus on devising and
implementing stricter policies.
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• Mistakes are often because of misunderstandings
and lack of awareness of repercussions with HMRC.
• Confusion all round of the rules!
• Timely submission and approval can cut down on
errors (deliberate or not) and ease cash flow.
Creating an expense policy
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• A staff expense policy is effective when backed
up by robust procedures and processes; if not it
becomes a waste of time and effort.
• The policy should:
Creating an expense policy
Control Costs Tax and NI Compliance
Manage Reputation Reduce Issues with HMRC
Reduce Fraud Joined up Staff Reward Strategy
Change Culture Maximise Efficiencies
Health and Safety Compliance Reduce Advisor Costs
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• A clear expense policy that:
• ensures employees understand exactly what they can and
cannot claim,
• is written in clear English and
• is easily accessible to employees for reference, such as on the
intranet.
• Will result in more efficient control of expenses
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• Induction training for new joiners
• Signing a declaration as part of the employee
contract
• Communicating the importance of the policy as
well as its contents
• No matter how well worded the expenses policy,
if managers or directors continue to sign-off
incorrect expenses, it is worthless.
Creating an expense policy
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• Analyse expenses spending data and review the
policy
• It will only be effective if expense policy
categories are distinct and cover relevant claims
that employees may need to make
• Companies run the risk of employees making lots
of claims under general categories such as
sundries
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• Encouraging
• authorisers to approve expense claims promptly, and
• staff to claim more regularly
will………
• cut down on the risk of fiddling and will ease the business’s
cash flow
but……..
• be prepared to challenge a claim
Creating an expense policy
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Key elements
• Is it supported by manual or electronic claims
• Keep it brief with purpose & scope
• For or on behalf of employee
• Travel expenses – car(incl. hire), train, plane,
taxi, tips
• Minimizing expenses (restrictions)
• Non reimbursable
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Key elements (cont….)
• What are work related expenses
• Business phone calls
• Staff entertaining
• Business entertaining
• Subsistence
• Professional subscriptions
• Incidental expenses
• Gifts
• Fines/personal/non business
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Key elements (cont…..)
• Procedure
• Links to other policies
• By when and to whom
• Who authorises
• Managers approval
• Rejection of claims
• Receipted – VAT or not
• Checking and excessive/false claims
Creating an expense policy
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• HMRC compliance visit
• Focus on expenses
• Systems and processes…….robust!
• Understanding
• Talk, walk and check!
• HMRC’s Business Expense Exemption….no more P11D
Dispensation
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Summary
• Well defined Guidelines
• Distinct Timeframes
• Easy to follow expense reporting procedure
• Straightforward employee communication
• Robust
Creating an expense policy
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Questions?
Creating an expense policy
CIPP - Creating an expense policy
Procedures and advice
Steve Ashworth
Associate Director, Bristol
0117 376 2298
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These notes have been produced for the guidance of
delegates at the conference for which they were prepared
and are not a substitute for detailed professional advice.
No responsibility can be accepted for the consequences of
any action taken or refrained from as a result of these
notes or the talk for which they were prepared.
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Smith & Williamson LLP
Regulated by the Institute of Chartered Accountants in England and Wales
for a range of investment business activities.
A member of Nexia International
The word partner is used to refer to a member of Smith & Williamson LLP
Portwall Place, Portwall Lane
Bristol BS1 6NA
Tel: 0117 376 2000 Fax: 0117 376 2001
www.smithandwilliamson.com