HR 4 September 2018

How to build a better business expenses policy and combat dodgy claims

The big question for employers is why employees are claiming false expenses in the first place
While every small business owner wants to imagine that their company has a well-oiled expense management system one that all employees use both confidently and responsibly the truth may be very different.

According to research from Soldo, which surveyed 2, 500 employees in the UK, employees spend, on average, 117 on unauthorised or inflated purchases each month. This means that on a nationwide scale, 1.9 billion is wasted on dodgy expense claims every year.

Some of the things they are spending company money on may surprise you; others may not. More importantly, however, we must look at the reasons behind these behaviours. Only once we do that, will it become clear that they are entirely avoidable.

From extra milesto a new bathroom

As you might expect, the most common inflated or unauthorised expenses employees admitted to was claiming for more miles than driven (27 percent). Other common creative? spending habits included keeping office supplies they bought for work (20 percent), buying an extra round of drinks for co-workers at the pub and claiming the money back (20%), and inflating taxI receipts to make the fare claimed higher (16 percent).

Less common (but notable!) expenses included using the company card to buy dog food, slimming pills, cod liver oil tablets, cat litter, cigarettes and condoms. A visit to a massage parlour and even an inflatable sheep were some of the other items that cropped up. One daring employee even went so far as to buy an entire new bathroom, and another admitted to expensing a holiday.

Why do employees submit false expenses?

The big question for employers is why employees are claiming false expenses in the first place. A significant 38 percent admit to claiming expenses when they know they shouldnt be, while 60 percent said they don’t feel any remorse for their actions. It might seem like employees submit false claims for no good reason, and a minority do but if you look beneath the surface, it’s clear these habits are indicative of wider issues within businesses.

There are a number of reasons why employees make these claims, but one stands out above the rest: 57% claim they are left out of pocket by their employer after spending their own cash on work related items. This is something that should never happen.

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HMRC

 

Keeping HMRC happy when claiming expenses such as holidays and golf lessons

Nobody wants to pay more tax than they need to, but company directors and sole traders often do, missing out on some significant opportunities when it comes to claiming expenses.

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However, nearly a quarter said they make these claims because they feel like they are working too much overtime and that their employer owes? them. A further 10 percent said they do it all the time, which may be down to the general belief that everyone else is doing it, while eight percent said they put through inflated claims when they’re having a tough time at work.

Importantly for small business owners, many employees feel that they are unlikely to be caught suggesting a lack of transparency and control. Indeed, fewer than one in five have been caught for claiming expenses they shouldnt be.

Recognising spending habits

According to Dr Lynda Shaw, a cognitive neuroscientist who specialises in business psychology, employers should be aware of different spending personas and set guidelines to help give employees a degree of autonomy, while keeping their habits in check. These personas include:

Reckless Ralph: Characterised by a more impulsive personality, he’s the one who will buy a round of drinks for office morale. One to keep an eye on.

Devious Dan: He will always be trying his luck by adding on various small extras over time rather than doing anything too obvious. He’s the one who always seems to spend a bit more than the other employees.

And, on the other side of the coin:

Sensible Samantha: She would never risk her job or even getting in trouble over claiming too much.


 
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