Guide to HMRC expenses compliance: FAQs

By Hayley Parks | 31st May 2018

from our UK office

Webexpenses has a proud track record of helping businesses to take effective control of employee expenses. From our experience, the one area finance teams tend to fear most is HM Revenue and Customs (HMRC) compliance.

In this white paper, we answer the most common queries about tax compliance to help you safely navigate the complexities of HMRC legislation, including:

Which expenses are covered by the HMRC exemption
When is a P11D required
Whether credit card slips can be used as proof of an expense
When do travel expenses qualify for tax relief
And more

See our other guides on maximising efficiency and minimising risks for more advice on HMRC expenses compliance.

Which expenses are covered by the HMRC exemption?

Exemptions were introduced in 2016 to replace the old dispensations system. It means that valid expenses paid or reimbursed by the employer do not have to be reported in their tax compliance check. This covers:

Business travel and subsistence
Business entertainment
Professional fees and subscriptions

Expenses are not covered by the exemption if:

Scale rates are not approved by HMRC
They are paid via a salary sacrifice arrangement

When is a P11D required?

P11D forms are filled in by employers for annual reports on employee expense payments as well as employee benefits. They are designed to inform HMRC about taxable benefits in kind that are not included in the payroll or subject to PAYE deduction.

A P11D is needed for each employee you’ve provided with expenses or benefits that are not covered by the exemption. You don’t need to submit a P11D for employees if you pay tax on all their benefits via payroll.

Can credit card slips be used as proof of an expense?

No, they’re not usually deemed to be sufficient for a HMRC compliance check. A receipt is required to prove that a cost was incurred. This must be legible and include the date, cost, name of the supplier, and VAT number. A digital copy of a receipt is equally valid as a paper original as long as it provides the same information.