Business expenses falsification still costing UK businesses

Falsification of business expenses, such as mileage, is fraud and is costing UK businesses millionsThe business of expenses fiddling was made a hot topic by the MP expenses scandal, news of which broke around seven years ago. The nation’s outcry on this was understandable, but the truth is that business expenses falsification has been going on much longer and is still happening today.

In fact, it costs UK businesses around £100m per year – a figure not to be sniffed at – and in a recent survey, 85 per cent of respondents admitted to being dishonest in business expenses claims.

Consequences for falsifying business expenses can be significant

It may be viewed as a victimless crime or a small act of dishonesty, but falsifying or exaggerating business expenses claims is a serious business, and is categorised under the Theft Act or the Fraud Act – so consequences can be significant.

Therefore, the best way to ensure employees are not at risk of committing fraud or theft in this way – knowingly or unwittingly – and to protect your business from falling prey to this, is to have a good business expenses policy and process in place.

A good business expenses policy is crucial

Setting out a policy that is clear and concise, to ensure it cannot be misinterpreted is key. Burying such a policy in a file or folder on a server will be ineffective. The document must be communicated and made accessible by all employees, existing and new. Both policy and processes should be evolving with the business to ensure it is always fit for purpose, and each time it is updated or revised, news of this should be rolled out across the organisation.

For too long, there has been opportunity for the exploitation of business expenses. The arrival of the digital revolution has helped many businesses improve their methods and processes of gathering documentation such as receipts – which can now be filed with ease using smartphone scanner apps. Even for business mileage, the proliferation of GPS and online route planners means mileage claims can be more accurate than ever, with much less opportunity for exaggeration here.

Making business expenses claims easier

Of course, in addition to making the policy and process robust and less susceptible to fraud, the company should also consider the employee financial position when expecting them to fork out for larger purchases in the course of their work. In the case of an employee having to make a significant out of pocket expense, the company should look at a faster method of reimbursement than the usual expense process – which may be monthly, for instance, and leave an employee short if waiting for a large claim. Employees that feel the company treats them fairly in the expenses claim process will be far less likely to overstate expenses.

For advice on devising a business expenses policy, visit our handy guide.