When it comes to expenses, regardless of the jurisdiction, Revenue inspectors need to identify if an organisation’s policy, process and documentation satisfy audit trail purposes and include evidence for tax and VAT purposes. The general rule for employees’ expenses is very restrictive.
In the UK, for example, all of the tests imposed by Section 336 ITEPA 2003 must be passed before a deduction is obtained. In Ireland, the first test is in the “nature of the employee’s employment”. The tests are stringent and exacting. Many companies have prevalent pain areas, which should be seen as red flags that all is not where it needs to be in order to meet Revenue guidelines and optimise organisational efficiency.
In essence, a revenue audit is a test in compliance. For VAT purposes, for example, invoices must include the date the invoice was issued, a reference number, the supplier’s VAT registration number, details of what was supplied, the name and address of the supplier, the name and address of the customer, the total invoice amount, the VAT rate, the VAT amount, and relevant consideration to the jurisdiction and other jurisdictions. Though VAT is not chargeable on many foreign invoices, it is important to correctly charge/not charge VAT.
When the above is compounded by the vagaries and complexities of office systems, processes, policies and claimant behaviour; it is small wonder that many companies struggle to keep their expenses processing in good order.
The top pain areas experienced by organisations, prior to employing an expense management solution, include;
- Low employee compliance rates, violating internal guidelines and exposing the company to an external audit.
- Expense report mistakes (incorrect expense amounts, fields, missing receipts, etc.).
- Employee’s failure to submit reports on time.
- Time required to process reports.
- Auditing for policy violations.
- Reconciliation of cash and card expenses
- Lack of transparency in expenses details.
The Revenue service in Ireland and the UK share the same objective in recovering money owed, by increasing collections and reducing tax evasion. This is all carried out by means of an audit. If you’re not sure yourself whether your expenses are in order then you’re bound to feel uneasy when the inspector arrives at your place of business. With the HMRC for example, a “non-deliberate” failure to comply can lead to up to a 30% fine of the potential lost revenue, if your organisation is deemed to be careless.
How could a managed service help?
You may have a software solution in place but are lacking in the area of administration for example, or vice-versa. Fexco’s clients experience the following benefits when using our suite of Expense Management Services, which are customised to suit individual client needs:
- Revenue satisfying VAT processes
- Simplified expense reporting process.
- Seamless system integration.
- Expense system mobility
- Reduction in manual data entry
- Reduction in overhead/staffing requirements
- Increased compliance
- Meaningful reporting and insights
- Faster employee claim submission and reimbursement
- Harmonisation of the multiple finance and HR systems
- Quick return on investment
- Simple on-boarding
We combine extensive operational and technical skills, with a loyal and dedicated employee base. Our operating model enables us to deliver continuously on our commitments, while remaining innovative. Our mode of operation reflects our company BPI ethos, namely the Voice of the Customer. We commit to continuous strong involvement from our executive team-members, who are motivated to build shared values. We guarantee a continuous improvement strategy, a genuine commitment to promoting and enhancing the values and the complete integrity of our clients business. We demonstrate that we are true to our brand, “Your Trusted Partner”.
Fexco provides managed solutions in the employee expenses space, including commercial card reconciliation, Help Desk and document management services. A leader in the foreign invoice processing space, Fexco understands, reconciles and captures invoice data for integration with client or end-customer systems. Our broad range of both technological and administrative solutions allows our customers to choose the service components that meet their particular requirements.
If you would like to speak to someone at Fexco EMS regarding the services we provide or would like a free trial of our Expense Manager employee expense management software, please contact EMSmgt@fexco.com