Many companies do not maximise on the opportunity to reclaim VAT back. Introducing expenses will ensure all complicated rules are adhered to and the maximum VAT is reclaimed with minimum effort.
Assuming the average monthly claim is £200 around 50% of that claim is VATable, but a manual system will miss 20% of this. For most organisations this is a sizeable loss:
No. of claimants |
Average monthly employee claim |
Total VAT lost to organisation p.a. |
1 |
£200 |
£35 |
50 |
£200 |
£1,750 |
100 |
£200 |
£3,500 |
200 |
£200 |
£7,000 |
500 |
£200 |
£17,500 |
1,000 |
£200 |
£35,000 |
10,000 |
£200 |
£350,000 |
Complex legislation on employee lunches means that many organisations do not claim their full entitlement of VAT.
Employees
You can claim back the VAT on lunches at any location for any business related reason, even reward, away from the normal place of work.
Sole Proprietors, Partners and Directors*
You can claim back the VAT on lunches at any location for any business related reason away from the normal place of work.
Entertainment
You cannot claim back the VAT on lunches when the meal is for business entertainment... ...However, you can claim back the VAT portion of the lunches of your employees in attendances
* A director is a share owning director, not necessarily those with the job title of director.
e.g. A director, employee and two clients go out for lunch between meetings at a client site. The total bill comes to £50. Many organisations will not claim back any VAT whilst some will reclaim it all:
| Expense |
Reason |
Net |
VAT |
Total |
| Lunch |
Customer Visit |
£42.55 |
£7.45 |
£50.00 |
However, as the VAT regulations for employees, directors and guests are different, organisations should claim:
| Expense |
Reason |
Net |
VAT |
Total |
| Lunch |
Customer Visit |
£46.28 |
£3.72 |
£50.00 |
If the lunch was for client entertainment rather than subsistence, the director's expense is not reclaimable:
| Expense |
Reason |
Net |
VAT |
Total |
| Lunch |
Customer Visit |
£48.14 |
£1.86 |
£50.00 |
expenses calculates the VAT based on the type of personnel in attendance. Users do not need to be VAT experts to submit a correctly calculated claim. If you would like to find out more information on the extensive VAT functions of expenses , simply call the expenses team on 01522 881300 or email expenses-info@software-europe.co.uk.
Example B: Fuel Claims - Pence per mile
For companies that reimburse employees with a company car for business travel a ‘pence per mile', Customs and Excise will allow you to claim back the VAT portion that relates to fuel only. (Note: the portion that relates to fuel depends on the fuel consumption of that car.)
For companies that reimburse employees using their own cars for business purposes a ‘pence per mile', the VAT claimable amount still has to relate to the fuel only portion. Therefore, the figure has to be pro-rata'd to the appropriate amount for fuel only, then calculated.
This becomes very complicated so, many companies have opted for a dispensation that agrees an average figure to make the calculation easier. But is this really benefiting the organisation?
e.g. VAT of 1p per mile is agreed, which assumes a car is doing about 50 miles to a gallon. As the average expense claimant's car probably does 25 miles to a gallon, the amount should really be about 2.8p per mile, assuming that a gallon of fuel costs £4 and the vehicle uses 16 pence of petrol per mile:
No. of claimants |
Average annual mileage claim |
Total VAT lost to organisation pa |
1 |
15,000 |
£270 |
50 |
15,000 |
£13,500 |
100 |
15,000 |
£27,000 |
200 |
15,000 |
£54,000 |
500 |
15,000 |
£135,000 |
1,000 |
15,000 |
£270,000 |
10,000 |
15,000 |
£2,700,000 |
expenses calculates the VAT based on the pre-configured engine size of the vehicle. Users do not need to be VAT experts to submit a correctly calculated claim. If you would like to find out more information on the extensive VAT functions of expenses, simply call the expenses team on 01522 881300 or email expenses-info@software-europe.co.uk.
TOP
Reducing Workload for Employees
Looking at timesavings alone - around 80% of the overall cost to an organisation - provides a compelling return on investment for Expense Management Automation. Based on the average annual costs of those involved in the expense process:
Savings per Employee
Every claim being completed takes an average employee 1 hour a month. As the average employee works 48 weeks a year (4 weeks holiday), and 35 hours a week. In each month on average they work 140 hours. Since much of the expense claiming process is now automated it will save at least 50% of this time.
expenses will save 1/280 th of the time of an employee. Assuming the average cost of an expense claiming employee is £30,000 a year this will save £107 per year per employee.
Savings per Line Manager
Every claim takes the average Line Manager 20 minutes each month to check. As the average employee works 48 weeks a year (4 weeks holiday), and 35 hours a week. In each month on average they work 140 hours. As much of expense claiming process is automated it will save at least 50% of this time.
expenses will save 1/840 th of the time of an employee. Assuming the average cost of a line manager is £45,000 a year this will save £53 per year per employee.
Savings in the Finance Department
Every claim takes accounts 30 minutes each month to check. As the average employee works 48 weeks a year (4 weeks holiday), and 35 hours a week. In each month on average they work 140 hours. As much of expense claiming process is automated it will save at least 50% of this time.
expenses will save 1/560 th of the time of an employee. Assuming the average cost of an accounts clerk is £30,000, this will save £53 per year per employee.
No. of claimants |
Average annual cost of time processing claims |
Total cost to organisation pa |
1 |
£213 |
£213 |
50 |
£213 |
£10,650 |
100 |
£213 |
£21,300 |
200 |
£213 |
£42,600 |
500 |
£213 |
£106,500 |
1,000 |
£213 |
£213,000 |
10,000 |
£213 |
£2,130,000 |
If you would like to find out more about how expenses can save your organisation time and money, simply call the expenses team on 01522 881300 or email expenses-info@software-europe.co.uk.
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expenses User Group 2005
Due to the
spectacular
growth and popularity of expenses over the last 12 months, Software Europe are holding the first
annual expenses User Group on Tuesday 25 & Wednesday 26 January.
The expenses team have formulated an agenda to ensure that after the two days are complete, delegates will leave having learnt more about expenses and the different system features.
If you have any questions regarding the User Group, or about expenses seminars in your area, do not hesitate to call the expenses team on 01522 881300 or email expenses-info@software-europe.co.uk.
How to create a report with expenses
expenses is incredibly simply to use and is fully configured to mirror each organisations existing paper or spreadsheet system and replace it
completely
with a web-based business solution.
For accounts departments the simplistic functions enable complex reports to be run without difficulty. The users can submit reports to query any information held in the expenses database.
There are two types of reports that can be run. Both are accessed from the ‘Reports' item on the administration drop down menu: Global reports can be selected and viewed by every user, whereas personal reports can only be run and viewed by the report creator.
Global Reports are reports that have been created by other users but access has been granted to all. NB. Only the creator of the report has permission to delete or edit a global report.
Personal Reports are reports belonging to the individual user. Users will only see their own reports and they will not be accessible by any other users.
Q: How easy is it to create a new report?
A: Very easy and very quick.
To create a new report, personnel simply click the ‘Add' button at the top of the screen. The screen displayed to create a report is designed to make it as simple as possible for the user to understand. To this end, the screen is divided in to five logical sections (or steps).
- General Details - report name, global or personal, export preference eg Excel, CSV
- Type of Report - detailed (for deeper
investigations) or summary (for an overview of spend)
- Column Selection - What you want to see e.g. employee name, date, costcode, item
- Group by and Column Sorts - How you want to view e.g. highest claim to lowest, client names alphabetically
- Criteria Filter - To view claims between specific dates, or before a specific date
All users (who have permission through their role) have full access to the reports module This data can be used for analysis purposes or for exporting the required data to be loaded into the General Ledger, or Payroll systems in CSV excel or flat file format.
The reports module allows you to include excel commands such as concatenation for further manipulation, and constant values against a line entry.
Report Output Interrogation
For cost saving and policy review reports can be generated and sorted in many ways for interrogation
Sum, Avg, Count, Min and Max On a Summary report numerical fields have extra functions which can be performed to tailor the report to specific requirements. These consist of Totaling (Sum) , an average calculation (Avg) , and a count of the minimum (Min) or maximum (Max) displayed. Particularly useful for budget reviews.
Criteria Filter
The criteria filter provides greater control over reporting, by allowing you search for data specific to your requirements. For instance you can search for data of a date or range, or for all employees, a specific group, or an individual.
Drag & Drop Grouping
Once a report has been run, it is possible to manually group by any number of columns
example - you may run a report which compiles all the spend against each sub category for a specified area. The purpose of this report is to identify where the biggest spend is within expenses
Drill Down
Through any report produced is the ability to Drill down. Click on any field name or count field to drill down and group by a specific field
- If you click on a date, this will compile all the items with that particular date
- If you click on a company name, all the items with that company names will be compiled
- If you click on an employee name, all the items for that employee will be compiled
- If you click on {320} miles, all the items with 320 miles will be compiled
A summary report of sub categories was ran, sorted by highest spend. Drilled down on the Fuel to investigate. Drag and Dropped the report by company name, which produced a total spend and fuel entry count against each company.
An entry from the office to a popular location was expanded (the extract report example below). This revealed that the mileage entered by several individuals was highly inconsistent. Upon further investigation, the individual claiming 233 was travelling a different route, which was also saving half an hour travelling time. This was broadcast to the claimants who can now take the reduce route.
Detailed reports can be generated within minutes saving valuable time and providing detailed data for analysis and policy improvement.
If you would like to find out more about expenses state-of- the-art reporting features and how they can help your organisation manage your employee expenses more effectively, simply call the expenses team on 01522 881300 or email expenses-info@software-europe.co.uk.
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