Duty of Care encompasses all the actions that should be taken by employers with regard to employees whilst driving on company business, even in their own cars.

The most efficient way to manage this is to automate the recording and verification of employee details with an automated expenses management solution. This will ensure that you are making all reasonable endeavours for your employees to be safe on the road and keep in line with current legislation.

If duty of care is not properly monitored this exposes the business organisation to significant financial risk, and risk to its reputation, as well as senior directors of the business organisation could also be personally liable if an employee had an accident as a result of work duties, through the introduction of the Corporate Manslaughter Act 2007.

How Expenses can help

Expenses Duty of Care functionality enables you to

• Record and upload documentation essential to employees driving whilst on company business
• Perform and monitor checks on vehicles used for business purposes
• Highlight when excessive mileage driven in a day by a single driver

"We introduced the duty of care feature to check the vehicle details for all employees driving their own cars on company business and found 1/3 of them did not have sufficient insurance cover."
Brian Woodhouse, Accountant, Business Link Northwest

Automated email notifications within Expenses will remind you when duty of care related documents need to be checked again. Mileage claims can even be stopped until the employee has produced the required documentation, ensuring a timely response to keeping their details and documentation up-to-date.

The extensive reporting suite within Expenses will allow line managers to see how many of their team are current with their vehicle details and find out when each employee will need to update their required documentation in the coming weeks and months.

Research has revealed that many organisations are not collecting sufficient information with regard to employee expense spending to comply with HMRC requirements. This leaves finance departments with very little supporting details to determine whether to record an expense item as an employee benefit, entertainment or business travel and subsistence.

It is vital for company’s to collect sufficient details about an expenses claim, to prove that it was made in the course of conducting business to classify it as a business expenses that does not imply further taxes. It is the responsibility of the employee to provide a satisfactory explanation to prove how the expenses claims play a legitimate role in the conduction of business.

One customer, when previously using a manual process, received a fine in excess of £100K for not being able to satisfy the authorities request for legitimate business reasons for their expenses spend.

If you do not record the reason for every expenses item and the customer or business it was claimed for, to the satisfaction of the Inland Revenue you could potentially be exposed to the same penalty.

How Expenses will help

Introducing Expenses will improve compliance, ensuring that all complicated items are recorded correctly with corporate and legislative policies. This allows you to realise the maximum amount of VAT that can be reclaimed, as well as capturing the information required for P11d reporting, PAYE Settlement Agreement completion and documenting entertainment expense when preparing your corporation tax calculations. Pertinent information to assist with compliance is held within expenses, therefore when a claimant enters the details of their claim are not required to be a VAT or Tax expert or need to have an in-depth knowledge of complicated legislation.

Expenses collects the information required for the accurate treatment of

• Employee entertainment
• PAYE settlement agreements
• Minimising corporation tax
• Maximising UK VAT reclamation
• European VAT handling
• Personal incidental expenditure
• P11d reporting
• Self assessment

VAT invoice

Additionally, to be able to reclaim input tax, an expense claim needs to be supported with the correct VAT invoice/receipt in line with current legislation to show that VAT has been charged. Expenses will prompt the claimant to enter the necessary details in order for the correct amount of VAT to be automatically calculated and to ensure the correct invoice/receipts are obtained.

On 1st January 2006 it became mandatory to retrain all invoices issued to your employees when the fuel is delivered to them; this could be as a full or less detailed VAT invoice. Input tax may only be claimed on the cost of fuel for business use in making taxable supplies. As such, the invoices only need to cover this amount.

Input tax

The general areas of input tax that are often misunderstood concern meals, business entertainment and road fuel.

For example: An expense claim that involves a working lunch would be blocked from recovering the input tax relating to business entertainment, but would be able to recover the portion of the expenses claim that relates to non-entertainment business use (subsistence for the employee).

If reimbursing employees with the HMRC approved mileage rates for their road fuel used, you can treat the VAT paid as input tax. However, this is only applicable on the portion that relates to fuel. HMRC will accept the published advisory figures for VAT purposes, though employers will need to retain receipts in line with current legislation. (The advisory rates will not be binding where an employer can demonstrate that the cost of business travel in company cars is higher than the guideline mileage rates).

When faced with the complexity of calculating the correct amount of input tax, and the fear of the considerable penalties if a claim is filed incorrectly, many organisations keep it simple and do not claim the recoverable input tax at all.

In many cases, organisations who have not automated expenses (with a supplier who understands UK VAT rules) lose 20% of the VAT they should claim back. Assuming 100 employees regularly claim expenses, with an average monthly claim of £200, with 50% of all claims being subject to VAT, if 20% is lost this equates to £18,200 a year being unclaimed.

The incorrect classification of an expense is a sizeable loss to an organisation and is often carried out through lack of supporting information or an incorrect understanding of the rules. The following table shows how much an organisation will pay for a £100 meal depending on how it is qualified:

Subsistence

Input tax can be claimed and no tax is incurred
£85.11

Entertainment

Subject to 30% corporation tax and input tax cannot be recovered
£130.00

Staff Benefits

Subject to PAYE settlement agreement for a 40% tax payer
£180.00

Approximately 68% of UK organisations report that more than 10% of their employee expense claims fall outside their corporate T&E policy, highlighting a real need for tighter control over fraudulent employee business expenses.

Software Europe conducted a survey on the expense claim process, which revealed that 4.91% of all travel and entertainment claims are fraudulent. Additional research revealed that 91.5% of those employees who submitted a false claim were never caught by their employer.

Fraudulent activities can soon add up

If 100 employees over claim by 50 miles each week and the policy is 40p a mile - this equates to £100,000 a year being over claimed - expenses provides the opportunity to identify and report which employees are over claiming for a given journey.

Active monitoring of employee spend and enforcing corporate guidelines are fundamental in preventing fraudulent behaviour.

How Expenses can help

It will ensure your company policy is visible and provide guidelines and automatic enforcements to reduce over claiming opportunities and encourage employees to be more vigilant when entering and authorising claims.

Every item entered onto the system can be reported on for management analysis and in doing so reveals enlightening spend patterns. Any items that do not comply to the corporate policy are also highlighted during the claiming process for further inspection, naturally reducing fraudulent behaviour.

Eriks reported an increase in compliance to policy from 59% to 89% when they implemented expenses.

With Expenses you can see

• Items claimed above the policy threshold
• Duplicate expense items
• Weekend expense claims
• Inconsistent mileage to the same location
• Employees claiming to travel separately to the same location on the same day
• Home workers claiming to travel to the office excessively, prompting tax liabilities
• And much more!

Expenses a web-based solution, which doesn’t require your employees to download or purchase additional software or hardware. They just need access to a web-browser and the internet or intranet.

Being able to manage the employee expenses reimbursement process online, means that your employees can approve and analyse expenses from anywhere in the world that has an internet connection. Expenses supports all web browsers including Firefox, Mozilla, Netscape and Safari (for the Mac)

How Expenses can improve things for the:

Claimant

A claimant is provided with all the information required to submit their expense claim with speed and simplicity. The information stored against an employee determines their privileges within the system and creates their own individual claim policy. For example the Managing Director wouldclaim different items and rates than a sales person.

With Expenses there is less information for the claimant to complete, they have access to the company policy online with a summary of their claimable items with spend limits clearly visible.

As a claimant, when you are happy that all your items have been added to your expense claim, all that is required is to click submit and the claim is automatically sent through the approval process chain. This reduces the overall time it takes a claimant to enter an expense claim, and speeds up the time it takes for reimbursement.

What’s more, a claimant can enter their account at any time to track the progress of the claim. Once it has reached final approval a claimant will receive an email to notify them that the expenses claim has been processed for payment.

Line Manager

A line manager will receive email notification of any claims awaiting approval. Using Expenses line managers will see

• Highlighted policy exceptions
• Potentially fraudulent claims – e.g. duplicate claims, claims made at the weekend
• Full details of the claim and each item

Line managers will also be able to

• Return entire claims or individual items to employees electronically
• Automatically forward the claim to accounts for payment
• Assign approval routines for holiday or absences
• View comprehensive Reports of departmental spend for analysis

Finance / Accounts Department

Once the claim has completed its approval process, the claim is then ready for the Accounts Department to check and pay.

Using Expenses will save at least 50% of the time spent by the accounts/finance department, calculating totals & VAT, approving, coding, checking for compliance to corporate and legislative policy, paying expense and keying data into accounts/GL systems.

There is now very little to check and any calculations regarding the total amount for repayment and VAT are automatic; because of improved accuracy there are fewer claims which need to be returned and held up for payment.

Furthermore, claims are by default within company policy and accounts now have more control to introduce a spot checking process of 1/10 claims and spend more time to create effective policies and other business critical tasks.

Additional Senior Management Benefits

Traditionally, senior management personnel are aware of the cost of expenses, but have little control or knowledge of what expenses has been incurred.

Expenses  provides in-depth reporting options on any and/or all expenditure. Management reports can be scheduled and delivered by email to provide a better understanding of the expenses spend. The reports are designed to provide the information to make effective informed decisions as well as reassurance the HMRC and company policy and duty of care obligations are being adhered to.

Typically, mileage is one area of travel expenditure that is over claimed by employees. With an automated system you can streamline and accurately capture the distances travelled saving your company money in over claimed mileage and save line managers and finance departments time in checking and approving these figures.

How Expenses can help

Automatic calculations – claimants enter the start and end location or postcode of where they travelled to, Expenses will then return either the shortest or quickest route depending on your policy.

Multiple destinations – employees can enter multiple postcodes and locations throughout the course of their duties taken each day. This then accumulates all the mileage and adds the return mileage to home/office automatically.

Passenger mileage – against each step of the journey the claimant can enter the number of passengers that accompanied them on that specific step.

Saved locations – when a new location is entered into Expenses the system retains this information, allowing it to be selected on future claims by simply typing in the lead characters that then returns available locations, relating to those search characters, in a drop down list.

Recommended mileage – the automatic mileage calculations are just the recommended mileage, if a claimant has a different figure, for example road works caused a diversion, then they can overtype the returned mileage and they then have the opportunity to give a reason for the change in mileage.

Capturing the carbon footprint of your employees when travelling on business can help you monitor, analyse and find ways to reduce your corporate carbon footprint.

Expenses is able to capture this information by categorising flights into domestic, short-haul or long-haul journeys. For mileage, vehicles can be grouped by type and engine size, which is already stored against the employee record.

The extensive reporting functionality within Expenses facilitates analysis into the carbon output emissions from individuals, departments or the company as a whole and details where the highest level of emissions come from. Through understanding this data you can look at ways to reduce or minimise the impact of these journeys through consolidating business meetings or utilising online resources to conduct meetings.

Other ways to reduce carbon emissions could be to introduce new policies that support environmentally-friendly options available, such as limiting the airlines employees can use to those that offset their passenger’s carbon footprint or use methods of transport with less environmental impact.

Seamlessly integrated, Expenses reporting is essentially designed with users in mind and allows you to report on any of the employee expenses information collected; making the task of producing and analysing detailed spend reports quicker and simpler.

Expenses reporting is accessed through a web browser, where you have the option to either select the required report from a suite of over 60 standard reports, or create your own custom reports.

Standard Reports are grouped into categories to help you easily find the required report, this facilitates optimised and simple querying and minimises report creation time. Additionally, the ‘Save As’ functionality allows you to duplicate a similar report and make basic changes to produce the relevant data, thus negating the need to build any additional reports from scratch. Furthermore, the user report writing interface is a flexible tool used to create and edit reports with complete control over the rows, columns and content, offering complex queries and in depth data analysis without the need for comprehensive database and report writing knowledge.

All reports can be viewed within the reporting module interface on screen with the powerful option to use the Drag & Drop function to group by a specific field and drill right down to a specific expense item. By selecting filter criteria of a specific date or range, or for all employees, a specific group, or an individual the system presents what you want to review, hiding the rest temporarily. Alternatively, all data can be exported to .csv or Microsoft Excel as either a spreadsheet or pivot table for further examination, introducing calculated fields to concatenate or create averages, or sort by minimum or maximum totals.

Expenses facilitates the analysis of spend providing real evidence to make changes to your policy which will bring continuous savings to your organisation. For example, if your organisation has multiple sites you may want to analyse the cost of employees travelling between these sites. A cost effective alternative could be a regular shuttle bus, which may not only save you money, but also relieve parking congestion and reduce CO2 emissions.