Receipts should always be kept for any business related expenses, no matter how small. However, it’s not always possible, in certain circumstances, to obtain a receipt, such as travel on a tube where it’s not possible to keep the ticket or obtain a receipt.
Employers can now use scale rates as set out by HMRC for certain expenses and where agreed with the employee. The guidance from HMRC states:
With effect from 6 April 2009, employers can opt to use the advisory benchmark scale rates for subsistence expenses that have been set by HMRC (see EIM05230). They can do so by ticking the appropriate box on form P11Dx or by making a request in writing. Where an employer applies to use the benchmark scale rates as part of a new or updated dispensation request, they will not have to undertake a sampling exercise (see EIM05210)
It is important that you only apply scale rate payments to appropriate items. In general, scale rates are only appropriate for expenses which are widely incurred, in broadly similar amounts, but for which it is often difficult to get receipts. For example subsistence, or the expenses of cleaning uniforms or protective clothing (see EIM32465). Scale rates should be set at a fairly modest level which, taking one day with another, will be enough to cover the relevant expenses. They should not be pitched at a level to cover the highest amount that an employee might spend.
Where a false claim is made, the penalties can be severe with the worst case scenario being imprisonment. Therefore it’s important to have procedures in place that make it possible to prove any business expenses incurred are genuine.