No more paper receipt hoarding for UK business

31 March 2014

A Software Europe and CIPP (Chartered Institute for Payroll Professionals) investigation into HMRC’s paper receipt policy has led to confirmation that UK businesses no longer need to keep hard copy receipts for employee expenses in storage for any reason, provided that electronic copies exist on their financial IT systems.

The announcement means that companies will save thousands in ongoing paper storage costs and personnel time as the process of recording and archiving paper copies of payroll and employee expense receipts for tax purposes can now officially cease. HMRC will not, it has confirmed, require paper as a back-up to electronically stored copies. Using an electronic expenses system to manage staff receipts for expenses such as mileage and subsistence is now recognised by HMRC as standard practice.

Software Europe, whose Expenses system is used by public and private sector companies to process expenses, including those of over 600,000 NHS staff in the UK, is now working with CIPP to educate finance teams on this important change.

Neil Everett CEO at Software Europe commented: “After investigation and clarification with HMRC we can now confidently state that the paper copies of receipts for employee expenses do not need to be stored, providing the person fulfils their obligation to preserve the records. The basic rule is that a company must create and retain normal business records, but these records do not have to be kept in a set, i.e. hard copy way which for years is how businesses have been lead to believe it must be. Most bookkeeping and computer systems will meet the requirement providing that they contain all the necessary requirements for your invoices to be valid VAT invoices (if applicable). Notwithstanding CH13300 records can be kept electronically, so long as the method of storage is capable of capturing the information accurately. It goes without saying that our own Expenses product naturally fits this description, hence the reason we were seeking clarification for our customers in the first place. I’m sure they’ll be very pleased to know they can say goodbye to the cost of storing all their paper receipts.”

Ian Hodson, Reward and Benefits Manager at The University of Lincoln and CIPP member commented, “We are really interested in this confirmation from HMRC that paper receipts are no longer needed. We did not want to fall into a potential grey area without HMRC clarification that the VAT rules on receipts records also applied to employee expenses.”

Karen Thomson, Associate Director of Policy, Research, and Strategic Visibility at the CIPP commented, “It’s a relief to have some cast iron policy on paper receipts at last. Not storing or managing a huge quantity of physical documentation will save our members time and money. Working with Software Europe to raise awareness of the news, we intend to recommend electronic expense systems should become a much wider-adopted standard and, importantly, be trusted more to deliver what HMRC really needs.

The CIPP is pleased to have worked with our member Ian Hodson from Lincoln University and online expenses provider Software Europe. For many years now online transactions have become the “norm” so it made sense for employers to want to remove paper from their systems including their expenses system. The CIPP has for a number of years scanned receipts and retained as the “original” receipt for claims without incidence.

I know of a number of employers that have moved to a complete paperless office including expenses; however it is always good to finally receive confirmation from HMRC that this is acceptable. So if the inspector wishes to see original receipts it will be very important to ensure he/she has access to your expenses system where the receipts are stored.”

Online versus paper receipts