Expenses

Don't let greed get the better of you!

Unfortunately some PAYE Umbrella Companies will encourage individuals to claim expenses that they have simply not incurred. This is usually by way of miss selling their HMRC dispensation.

The Umbrella Company says I don't need to get or keep receipts in order to claim expenses?

This is not true and is very bad practice for the Umbrella to advise you in this way. Receipts will be required to support all expenses claims. In some circumstances you may be permitted to retain the receipts at your own premises for auditing purposes however any agreement in this regard should not absolve you of your obligation to obtain and keep receipts for any expenses claimed.

HMRC requirement is that receipts are retained for a period of up to 7 years for auditing purposes.

You should also keep detailed mileage logs that clearly set out start and ending post codes for all business journeys you make.

What will happen to me if I can't substantiate my expenses claims to HMRC if ever required to do so?

If you claim an expense it is down to you to substantiate the claim that you make. If you are unable to do this a HMRC Investigation would result in you having to pay any underpayment of tax. You will also incur fines and penalties and if it were deemed that you had committed an act of fraud, depending on the severity of the case you could possibly face a custodial sentence.

The Umbrella Company says I am protected from HMRC investigation?

You should be wary of any PAYE Umbrella Company that claims you are protected from HMRC investigation as any recourse will be with you personally and not the Umbrella Company. It is therefore imperative that you only claim for what you are entitled to claim for and more importantly you can support in order to safeguard your tax status.