One third regularly inflate their expenses
In August 2017 Allstar Business Solutions released its findings from a survey of 1,000 employees about work-related expenses. Although this is a small sample, the results revealed that:
- 36% of employees had over claimed on their business-related mileage
- 17% of employees deliberately inflate their work-related expenses each month; and
- 41% of employees felt there wasn’t anything wrong in fraudulently claiming expenses - despite the fact it’s illegal.
That little bit extra
55% admitted to adding up to 10% extra onto their work-related expenses every month and 25% indicated that they claim an additional 20% each month. In total, it’s estimated that this behaviour is costing UK employers nearly £1.6 billion each year. In practical terms, if you have 15 employees who claim work-related expenses each month, Allstar’s research would suggest that at least 2.5 of them are deliberately over claiming.
Avoiding the risk
Of course, many employees are entirely honest but it’s not worth taking the risk. When asked why they over claimed on their expenses, 28% of employees said it’s simply because they could “get away with it” . So what can you do?
Tip. One easy way to prevent this behaviour is to tell your employees that random spot checks will be carried out on expenses claims (see The next step ).
There are several options available for carrying out such checks. For example, you could select names at random or scrutinise, say, the first and last expenses claim forms received. Our advice is to carry out checks on at least a bi-monthly basis and, unless you only have one claim submitted, always select claims from at least two employees. That way, an employee can’t accuse you of singling them out for an expenses check.
Tip 1. The expense most vulnerable to false claims is mileage. If you pay HMRC rates, an extra three miles per journey will net the employee £1.35 tax free. That doesn’t sound much but if they do 20 journeys per month that’s £324 per year - or £810 if 2.5 employees are deliberately over-claiming. So check mileage claims carefully and challenge any discrepancies (see The next step ).
Tip 2. Unless you know for sure, check - on a random basis if necessary - that a work-related journey actually occurred. It’s amazing how many employees claim for the same journey twice or work-related trips that were never taken.
Tip 3. As well as random spot checks, where relevant, insist that employees always submit original receipts in order to reclaim their expenses, regardless of the amount claimed. If no receipt was issued, or it’s been damaged or lost, you could agree to accept other evidence, e.g. an entry on a bank or credit card statement.